Wearable shipments reached 22 million units in the first three months of the year, up from 18.2 million in the same period in 2016, Strategy Analytics said in a report released on Thursday.
Apple shipped 3.5 million Apple Watches, up from 2.2 million the year before, capturing 15.9 percent of the entire wearable market. The U.S. technology giant clinched the top spot for the first time since the third quarter of 2015.
Fitbit, which has consistently been at the top in terms of market share, fell dramatically. The company, which makes products such as the Flex 2 fitness tracker and Blaze smartwatch, shipped 2.9 million devices in the first quarter, down 35 percent from the year before. Meanwhile, its market share slipped to 13.2 percent, down from 24.7 percent in the first quarter of 2016. Fitbit's official numbers showed that it in fact shipped 3 million devices in the first quarter. This still leaves it in third place.
It sat behind Chinese electronics maker Xiaomi, which had a 15.5 percent market share.
"While 2017 remains a transition year, we have executed on our restructuring plan," Fitbit CEO James Park said in a press release on Wednesday.
But analysts warned that the company which once dominated the wearable market may have already peaked.
"Fitbit is struggling in the face of growing competition from fitness-led Apple Watch and others and Fitbit's golden era has now come to an end," Neil Mawston, executive director at Strategy Analytics and one of the authors of the research, told CNBC by email.
Shares of Fitbit have plunged over 65 percent in the past year.
Other vendors such as Apple have put a heavy focus on the health features of their devices, which is eating into an area that Fitbit once had control of. Apple does not break out official Apple Watch sales figures which are included under the "other products" section of its earnings statement.
This segment's revenue grew 31 percent year-on-year in the firm's fiscal second quarter earnings released this week, but it also includes other products such as Apple TV and Beats. In September, the company released the Apple Watch Series 2, a refreshed version of its smartwatch, which has helped sales.
"The new Apple Watch Series 2 is selling relatively well in the U.S., U.K. and elsewhere, due to enhanced styling, intensive marketing, and a good retail presence," Mawston said in a press release.