It came 27th out of 159 areas across Britain in the annual 'Happy at Home Index', produced by property website Rightmove.
Only Harrogate and Skipton, both of which are towns, finished higher in the regional rankings for Yorkshire and the Humber.
The table was compiled by asking residents to rate where they live on a dozen factors, from community spirit to nature and green spaces, with more than 17,000 people having their say.
Sheffield scored particularly highly when it came to people saying 'I can be myself', ranking 15th, and contentment with essential services like schools and doctors, coming 16th.
Elsewhere in South Yorkshire, Doncaster was 130th and Barnsley 117th. Rightmove said Rotherham was not ranked as the sample size was considered too small to give a meaningful result.
Doncaster scored best when it came to community spirit, for which it was ranked 96th, and essential services, for which it placed 104th.
Barnsley was 12th in the country for satisfaction with essential services.
Maz Iqbal, director of Sheffield Residential estate agents, said: "It comes as no surprise that Sheffielders are happy at home as who wouldn’t be happy to live here?
"We have an excellent array of services on the doorstep of the majority of the city with fantastic schools, two high quality universities and ample leisure opportunities.
"I think the most major of factors is that we're often told by visitors to the city that the people of Sheffield are among the friendliest they've come across during their travels. This makes people happy in their surroundings and the city a generally lovely place to be."
Rightmove's research manager Abiola Oni said: "We’ve looked at the connection between each of the factors and what contributes to how happy people say they are overall, and it’s the people in an area and how someone feels about living there that makes the biggest difference.
"So the strength of community spirit, people feeling like they belong and that they can be themselves are all more important than the services and money that they have, though these do still contribute to overall happiness."
Sheffield finished well above many other big cities in the north and Midlands.
Leeds was 77th, Derby 82nd, Liverpool 107th and Manchester 125th.
Royal Leamington Spa in Warwickshire was crowned Britain's happiest place, followed by Leigh-on-Sea and Wirral.
Sheffielders scored themselves 7.2 out of 10 for happiness in another survey by the Office for National Statistics, the results of which were published last month.
Although this was a high mark, it was below the national average of 7.5.
How happy are people in Yorkshire and the Humber?
Harrogate: 4th in Britain
* according to Rightmove's Happy at Home Index