Catton, 28, won the award for her second book, "The Luminaries." The previous youngest winner of the Booker was Ben Okri, who was 32 when he won for "The Famished Road" in 1991.
"The Luminaries" is a murder mystery set on the west coast of New Zealand during the 1860s gold rush. Judges described the book as a "Kiwi 'Twin Peaks.'"
The judges, headed by chair Robert Macfarlane, said it was a "dazzling work, luminous, vast" and "extraordinarily gripping."
"We have returned to it three times," he said. "We have dug into it and the yield it has offered at each new reading has been extraordinary."
"The Luminaries" is also the second-longest book to win the award at 832 pages, passing the last record-holder by 160 pages. Catton joked about the tome as she received the award.
"I've actually just had to buy a new handbag because my old handbag wasn't big enough to fit my book," she said, before thanking her publishers for allowing her to pursue her complex, lengthy "publisher's nightmare" by freeing her from commercial pressures.
"I was free throughout to concern myself with questions not of value, but of worth," she said.
Catton is the second Kiwi to win the prize, which is awarded each year for the best English-language book published by a citizen of Britain, Ireland or a Commonwealth country. The winner receives $79,880 (GBP 50,000) in cash as the award.
Fergus Barrowman, New Zealand publisher of "The Luminaries" at Victoria University Press, said he realized on reading the manuscript he was dealing with a "masterpiece -- a brilliant and brave and totally successful work of art."
"I knew it had the potential to go this far, but you never count the chickens in this game," he said. "I think it will be a book that's read for decades to come."
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