Player-of-the-match in all three of New Zealand's games during their Pacific Cup triumph, Brown was widely expected to claim the biggest individual award of his career.
But the Newcastle-bound playmaker was narrowly pipped at the post by Grant, with the Melbourne hooker impressing judges during Australia's 3-0 Ashes rout of England.
Melbourne teammate Cameron Munster was also overlooked, despite being named man of the series by a seven-person judging panel at the end of the Ashes.
It came as Brisbane centre Julia Robinson won the women's award after being the stand-out player of the Pacific Cup for the Jillaroos.
After scoring seven tries in four games for Australia this year, Robinson was unanimously voted player of the year in the women's game.
The vote was not so clear cut in the men's space.
Brown was the outright star of this year's Pacific Cup, scoring the match-winner against Samoa before scoring two tries and setting two more up against Tonga.
Then in the tournament's final, he busted nine tackles and set up three tries in the 36-14 win over Samoa to be named both player of the match and series.
But ultimately the panel of Darren Lockyer, Cameron Smith, Ruben Wiki, James Graham and Petero Civoniceva were won over by Grant's output in England.
Grant was Australia's best player in the third Test at Leeds and also impressed while deputising for Isaah Yeo as captain when the Kangaroos secured the Ashes in Liverpool.
Kiwi forward Joseph Tapine was also in the running and finished behind Grant and Brown in a close vote for the award.
"Harry showcased his skill and leadership in the first Ashes Series for 22 years and played a key role in Australia's win over their great rivals," IRL chair Troy Grant said.
"He constantly had the England defence back-pedalling with his clever dummy-half running, topped the tackle count for the Kangaroos, captained Australia at Liverpool and scored a brilliant try to blow the match open at Leeds.
"For Harry to perform at that level - and with the same consistency - on the international stage, confirms his standing as one of the game's best players."
Meanwhile, Robinson's success comes after she was narrowly beaten to the Dally M by Broncos teammate Tamika Upton this year.
After leading the race with two rounds to go, Robinson was rested from the penultimate round and finished three points behind Upton.
Robinson then became the Jillaroos' leading try-scorer of all time in the Pacific Cup by taking her career tally to 22, highlighted by an acrobatic try of the tournament against Samoa.
"Her try against Samoa elevated women's rugby league to another level," Troy Grant said.
"Fans around the world marvelled at Julia's ability to time her run perfectly and fly through the air like a superhero."
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