Calibre, which charts the nighmarish events which unfold for two friends after a tragic accident on a weekend hunting trip, won the long-running Michael Powell Award for best British film at the event.
Sir Sean Connery's son Jason was on the jury panel for this year's Michael Powell Award, which has been running for nearly 30 years.
The film, a debut feature launched by Edinburgh-based filmmaker Matt Palmer at the festival, is said to have been inspired by classic thrillers like Deliverance, Straw Dogs and Southern Comfort.
The main characters Vaughn and Carter are turned on by the locals in an isolated village as they face an increasingly desperate battle for survival.
The two leads are played by rising Scottish star Jack Lowden, whose previous credits include Dunkirk and last year's closing gala England Is Mine, in which he played indie-rock icon Morrissey, and Northern Irish actor Martin McCann.
Palmer, the writer and director of Calibre, said: "We're absolutely thrilled and hugely honoured to have received the Michael Powell Award for Calibre.
"Winning this prestigious award represents an amazing culmination to the nine years of intense work which brought the film to fruition. It wouldn't have been possible without the constant belief, spirit and commitment of producers Al Clark and Anna Griffin, the incredible support of Creative Scotland, Creative England and our other funders, and the absolutely outstanding work of our irrepressible, highly talented cast and crew.
"This is a hugely exciting moment as we now also move towards our global release on Netflix. This award is for everyone involved in Calibre."
Rosie Ellison, head of the Film Edinburgh commission, which promotes locations for film and TV productions in and around the capital, said: "Edinburgh is proud of its home-grown production talent and it’s good see recognition going to a film created by Edinburgh’s film sector, including director Matt Palmer, co-producer Wendy Griffin and several of the production crew.”