While both albums have sold over 5.1 million copies in the UK, the Swedish band's 1992 Best Of collection has now nudged ahead of The Beatles' 1967 album by nearly 15,000 copies.
An estimated one in five British households owns a copy of either Gold or Sgt Pepper's.
The announcement coincides with this year's Eurovision Song Contest being held in Abba's homeland. The group won Eurovision in 1974 with Waterloo, which became their first number one single in the UK.
Bjorn Ulvaeus, who co-wrote Abba hits including Dancing Queen, Knowing Me Knowing You and The Name Of The Game said: 'It feels unreal - outselling the greatest record of all time.'
This week may also mark a double celebration for Abba, with the group's former singer Agnetha Faltskog looking set to score the highest-charting solo album of her career this evening.
Her new offering, A, looks likely to break the top 10 according to mid-week sales figures, while her previous UK best, My Colouring Book, peaked at Number 12.
In Abba's native Sweden tonight, Danish singer Emmelie de Forest won this year's Eurovision Song Contest with her song Only Teardrops.
The blonde, who sang in English, was crowned this year's winner following the lengthy spectacle in the town of Malmo.
By Olivia Williams