Skepta is the second grime artist to win the Mercury award, after Dizzee Rascal took the coveted music industry accolade in 2003.
Accepting the £25,000 prize for his fourth album in front of a star-studded audience of music industry peers, the rapper, whose real name is Joseph Junior Adenuga, said: "I'm just so thankful. I've been trying to do this music stuff and work it out for so long. I was like' let's do it for ourselves'. All these songs, we've travelled the world - no record label, nothing. We just did this for us but the love is very appreciated.
"For everybody who knows what it takes to put an album together, cos it's so much more than just making the music," he added. "We all won today. Konnichiwa!"
The award was presented by Mercury Music Prize judge and Pulp frontman Jarvis Cocker. "If David Bowie was looking down on the Hammersmith Apollo tonight - and maybe he is, we've seen traces of his influence in many of the acts tonight - he would want the 2016 Mercury Prize to go to Skepta," he said.
Taking to the stage with his team and his mother and father, for his emotional speech Skepta performed 'Man (Gang)' after paying tribute to David Bowie and Amy Winehouse.
Reflecting on his win he told the BBC that he hopes his accomplishment in creating the album without a record label would be a source of encouragement for other young artists. "I feel happy that my whole team is celebrated. This isn't just me. There's a lot of people behind it so this for everyone. I'm a grime artist and I think its done a lot for anyone who feels they have to answer to someone else. I hope I've shown them that you can go it alone."
Described by NME as a "landmark in British street music," the album addresses issues such as police harassment in modern Britain.
The late music icon David Bowie who was nominated for his final album, Blackstar, was widely expected to win the top prize for his final album. Reacting to the news Bowie's PR posted a message on Facebook writing: "Sorry if you put your money on Blackstar but it's not won The Mercurys."
The legendary star was however, acknowledged in a moving tribute by actor Michael C Hall who performed the song Lazarus. The star of Dexter and Six Feet Under, who will soon be seen in London in the lead role in Bowie's musical - also called Lazarus told the BBC:'It's an unspeakable honour. It's as humbling and gratifying as anything I've ever been invited to do.'
Bat for Lashes, Jamie Woon, Kano, Laura Mvula, Michael Kiwanuka, Savages, The 1975, The Comet is Coming and Anohni were among the performers at Thursday's ceremony.
Meanwhile, the final result had Twitter divided with Bowie fans decrying the decision not to posthumously honour the star with an award for his swansong album.
"To produce some of your best work aged almost 70 whilst dying of cancer is a remarkable feat worthy of recognition," remarked one disappointed viewer.
"And it's extra disappointing because there will be no new Bowie music EVER to nominate him for awards ever again," noted another.
Singer Boy George also turned to social media to share his disappointment at the lack of "respect" for Bowie's music.
"I have zero against Michael C Hall but the 'Mercury Prize' has failed yet again to respect David Bowie. #MercuryPrize I want to cry!" he said.