The 44-year-old has become only the second Scottish author to win the coveted literary prize for the book, which focuses on a young boy struggling to help his mother as she battles with alcoholism.
Set in a Glasgow council housing estate during the 1980s, in the early years of Margaret Thatcher’s tenure as Prime Minister, Shuggie Bain was partly inspired by Stuart’s own upbringing in the city and losing his own mother to alcoholism when he was just 16.
The book was written over 12 years while Stuart was working as a fashion designer in New York, where he still lives, however he has insisted that the central characters could not have existed anywhere other than Glasgow.
Stuart’s win, which secures him a £50,000 prize, was announced at the end of an awards ceremony featuring appearances by former American President Barack Obama and the Duchess of Cornwall.
Margaret Busby, chair of the judges, said: “Shuggie Bain is destined to be a classic — a moving, immersive and nuanced portrait of a tight-knit social world, its people and its values.
"Shuggie struggles with responsibilities beyond his years to save his mother from herself, at the same time as dealing with burgeoning feelings and questions about his own otherness.
"Gracefully and powerfully written, this is a novel that has impact because of its many emotional registers and its compassionately realised characters.
"The poetry in Douglas Stuart’s descriptions and the precision of his observations stand out: nothing is wasted.”
Stuart, who said he was "absolutely stunned" after his win was announced, dedicated his prize to his late mother.
Stuart said: "I've been clear that my mother is on every page of this book. Without her I wouldn't be here and my work wouldn't be here. She would be absolutely thrilled and I think she would be proud.
"I know it’s only the second Scottish book to have won in 50 years to have won. That means a lot for regional voices and working class stories.
"Thank you to the people of Scotland, and especially Glaswegians, whose empathy, humour, love and struggle are in every word of this book.
"To all the readers who have come and let me know that Shuggie and Agnes have touched their lives, the greatest gift is just to be able to connect with you.
"My mother unfortunately suffered with addiction and didn't survive that addiction. For 30 years I’ve carried an awful lot of love, loss and pain. I wanted to tell the story of what it was like to grow up queer in Glasgow and to live with a parent you couldn't save. Writing the book was incredibly healing."
Stuart revealed he has finished a second Glasgow-set novel, Loch Awe, which will focus on a love story between two teenage boys from either side of the sectarian divide.
He has told how reading Glaswegian author James Kelman’s 1994 Booker winner - How Late It Was, How Late – changed his life.
Stuart said: “It’s such a bold book, the prose and stream of consciousness is really inventive. But it is also one of the first times I saw my people, my dialect, on the page.”