He received 62 first-place votes and 404 points in balloting by 121 sportswriters and broadcasters in the United States and Canada.
Miami's Eric Spoelstra finished second. He was followed by New York Knicks coach Mike Woodson, San Antonio's Gregg Popovich and Indiana's Frank Vogel.
The coach of the year award is Karl's first in 25 NBA seasons. The only other Nuggets coach to receive the honor is Doug Moe.
Karl, who left the sideline several years ago to battle cancer, guided the Nuggets to a team-record 57 victories and the No. 3 playoff seed in the Western Conference as Denver reached the postseason for the 10th consecutive year.
The injury-ravaged Chicago Bulls ruled out forward Luol Deng for Game 2 of their Eastern Conference playoff series with the Miami Heat on Wednesday night and listed guard Kirk Hinrich as doubtful.
Deng is still not with the team. He remains in Chicago while recovering from an illness that sent him to the hospital last week for a spinal tap. Hinrich continued to be slowed by a calf injury.
Hinrich has not played since Chicago's triple-overtime win in Game 4 of the first-round series with the Brooklyn Nets. Thibodeau said Hinrich's condition is improving and he remains day to day.