The Stockholm International Peace Research Institute (SIPRI) said the US topped the list, with 57% of total arms sales in 2017.
The SIPRI Top 100, an index of the largest arms-producing and military services companies in the world, placed France fourth, with 5.3%.
The size of China's arms industry is not included in the report as the data is not available.
The report found the sales of arms and military services amounted to $398.2bn (£315.3bn) in 2017 - some 2.5% higher than the previous year.
The 2017 figures were a 44% increase since 2002 and marks the third consecutive year of growth in Top 100 arms sales.
The UK held its position as the largest arms producer in Europe in 2017, with total arms sales of $35.7bn (£28.3bn).
Seven UK companies were listed in the Top 100, with the UK’s biggest arms producer BAE Systems ranking fourth in the Top 100.
The combined arms sales of British companies were 2.3% higher than in 2016, largely due to increases in the sales of BAE Systems, Rolls-Royce and aerospace components company GKN.
Russia rose up the list to become to second-largest arms producer last year, a position held by the UK since 2002.
The arms sales of the 10 Russian companies listed in the Top 100 increased by 8.5% in 2017 to $37.7bn (£29.9bn).
"Russian companies have experienced significant growth in their arms sales since 2011," said Siemon Wezeman, a senior researcher with the institute.
"This is in line with Russia’s increased spending on arms procurement to modernise its armed forces."
Some 42 American companies made the list in 2017, with total arms sales of US companies growing by 2% in 2017 to $226.6bn (£180bn).
Five US companies were listed in the top 10 in 2017, with Aude Fleurant, director of SIPRI's arms and military expenditure programme, commenting that "US companies directly benefit from the US Department of Defence’s ongoing demand for weapons".