World Rugby will announce this year's winners at their annual awards dinner in Monaco on November 26.
"It's an incredible honour to be nominated for World Rugby Women's player of the year", said Thompson.
British and Irish Lions duo Owen Farrell and Maro Itoje lead the charge after a trophy-laden season for both club and country, following the drawn series against the world champion All Blacks.
She is nominated alongside Kelly Brazier (New Zealand), Portia Woodman (New Zealand), Romane Menager (France) and Safi N'Diaye (France).
The oldest of the nominees at 28, Folau has been back to his scintillating best in 2017.
Wallabies full-back Israel Folau has also been shortlisted after scoring an Australian record 12 tries in 10 Tests this year.
The shortlist was selected by the new star-studded World Rugby Awards panel which comprises Rugby World Cup winners Richie McCaw, John Smit, George Gregan, Maggie Alphonsi and former England coach Clive Woodward alongside Brian O'Driscoll, Fabien Galthié and Agustín Pichot.
The new selection process will see fans, global captains, coaches and media have their say before the panel considers the victor of the prestigious award.
"As ever, the selection of Men's and Women's 15s Player of the Year nominees by the panel has excellence as the core consideration and all are not just superb players, but role models".