Businesses and residents joined together to light up the town for the competition, organised by Arundel Town Council.
The largest shop in Arundel, Spencer Swaffer Antiques, and the popular Bagel & Coffee shop on the High Street won joint first prize for businesses, whilst Kirsten Pottinger and Dave Rimer won the prize for the best house.
Each of the three winners received a cheque for £100, payable to the charity of their choice.
The selected charities were Chestnut Tree House (chosen by both Bagel & Coffee and by Kirsten Pottinger and Dave Rimer) and Medical Detection Dogs (Spencer Swaffer).
The prizes were donated by Arundel Mayor, Tony Hunt, who judged the competition.
“Arundel is a magical place to visit at Christmas, and this year everyone seems to have made an even greater effort to raise our spirits," said Mr Hunt.
"It really is worth a visit to Arundel to see the displays in the town."
On his tour of the town to judge the displays, the mayor was accompanied by Father Christmas, played by Iain Stirling, by the chairman of the Chamber of Commerce, organiser Sharon Blaikie and Arundel photographer Nigel Cull.
The mayor and Father Christmas were chauffeured by Charles Smiles in his tuk-tuk, which had been specially decorated with Christmas lights for the event.
Mr Hunt said awarding the prizes was very difficult because of the variety of buildings.
He said: “Spencer Swaffer Antiques has a dazzling gold display around windows full of stars, which is simply irresistible.
"Bagel & Coffee has a much smaller frontage to work with, but the simple design of the window, the use of pure white lights and nutcracker figures (including the mice), seem to make the very most of the character of the building.
"You could almost expect to see Dickens’ characters coming out the door after a bagel and coffee."
The residents’ competition was equally difficult, the mayor thought.
He added: “Arundel is a town where people do not draw their curtains, so in many houses the decoration outside are complemented beautifully by the decorations inside. And then you have other houses which say ‘It’s Christmas, let’s have go for it and really brighten up the streets’.
“In the end the Kirsten and Dave’s Christmas display was just spectacular and enormous fun, an unmissable landmark on Torton Hill Road and a wonderful backdrop for the couple to get engaged last week!"