The group, which also owns the Mini and Rolls-Royce brands, said net profit soared to €3.23 billion ($4.45 billion) from €210 million in 2009.
Revenues were up 19.3 percent to €60.48 billion while core earnings before interest and tax (EBIT) were more than 17 times higher at €5.09 billion, compared with a disappointing 2009 figure of €289 million.
The company proposes to pay shareholders a dividend of €1.30, up from €0.30 in 2009, a statement said.
It said it expected record sales this year again of at least 1.5 million vehicles.
"We are extremely pleased with developments over the past financial year," BMW chairman Norbert Reithofer said in the statement.
"We have set new records for revenues and group earnings and have more than achieved our targets for the full year," he added.
German luxury car makers had a great year in 2010 as demand in emerging countries like Brazil, China, India and Russia soared in the global economic rebound.
BMW's main market in the United States was also in better shape and sales in countries like South Korea and Turkey are progressing as well.
In terms of volume, BMW had its second best year ever, delivering a total of 1,461,166 vehicles worldwide for a gain of 13.6 percent on the year.
The BMW brand reported a jump of 14.6 percent to 1.24 million vehicles, Mini deliveries set a record of 234,175 and Rolls-Royce also posted a record of 2,711 limousines.
Looking ahead, the group was upbeat and said that "a balanced relationship in sales activities between Europe, Asia and America remains the goal."
Reithofer added: "We are targeting record sales of more than 1.5 million vehicles in 2011 and expect to achieve new highs for all three of our brands."