Angela Jackson, one of 42 writers in the running for the prize, said it felt "special" to win the accolade for her debut novel, The Emergence of Judy Taylor, after being chosen by a public ballot.
Visitors to this year's festival voted her book ahead of other first works by such authors as Gill Hornby and broadcaster Dawn O'Porter.
Jackson's novel tells of an unhappy woman who embarks on a new life.
She said: "It's great to know I'm on the right track [and] that my work is connecting with readers."
Jackson, from Edinburgh, said the win would spur her on to complete her second novel.
Nick Barley, director of the Edinburgh International Book Festival, said Jackson's triumph was "a home-grown success story."