Gareth Bale and co. now sit 11th in the world rankings, above England, while Iceland are 22nd after their impressive runs at the European Championship. Winners Portugal nudge a little higher and Germany stay in fourth.
Portugal have risen two places in the FIFA world rankings to sixth after their Euro 2016 triumph and are now one place above runners-up France, who jumped 10 places to seventh.
The tournament's surprise packages, Wales and Iceland, both saw significant leaps to 11th and 22nd respectively.
Euro 2016 semifinalists Wales surged up 15 places and are now two spots above their big rivals England, who are 13th.
According to the rankings, Argentina are still the best team in the world, despite recently losing to Chile in the Copa America final, with the latter keeping their fifth spot.
Germany's position has not been affected by the world champions going out of Euro 2016 in the last four and the national team sit fourth, behind Belgium and Colombia.
Top 10 (last month's positions in brackets)
1. Argentina (1)
2. Belgium (2)
3. Colombia (3)
4. Germany (4)
5. Chile (5)
6. Portugal (8)
7. France (17)
8. Spain (6)
9. Brazil (7)
10. Italy (12)