Installation artist Laure Prouvost has won this year's Turner Prize for her piece Wantee, which takes the audience in search of her fictional grandfather.
It was announced by actress Saoirse Ronan at a ceremony in Londonderry, the UK City of Culture 2013.
Prouvost beat humorous artist David Shrigley, painter Lynette Yiadom-Boakye and performance artist Tino Sehgal to take the £25,000 prize.
"I'm not ready, I didn't expect it at all," Prouvost said on stage.
"Four incredible artists here with me and the show. I thought 'It can't be me,' - I was sure it was not me. So thank you everybody," she said, as her baby daughter was brought on to the stage by Ronan..
The French artist, who lives and works in Britain, thanked organisers for accepting her into the art scene.
"Thank you for adopting me, thank you for having a French one here," said Prouvost, 35, who also won the fourth Max Mara art prize for women in 2011.
"I've been here so many years and I feel adopted totally now by the UK, thank you."
Judges found Prouvost's piece, which was commissioned for this year's Schwitters in Britain exhibition at Tate Britain, "unexpectedly moving".
The panel said the film, which played in a room styled like a tea party, was "outstanding for its complex and courageous combination of images and objects in a deeply atmospheric environment".
It explored the lasting legacy of artist Kurt Schwitters through a fictional grandfather, who she had imagined to be a conceptual artist and one of Schwitters's close friends.
It was named Wantee, in honour of Schwitters's companion who had a habit of asking "Want tea?".
"It is a conversation about this idea of reality and fiction and what is true and what is not, and where it blends," Prouvost told the BBC's Arts Editor, Will Gompertz.
"I love the idea that everyone creates their own vision of everything you see. Maybe for me first it was not being English, I misunderstood things."
She continued: "Everyone creates his own story, even from a very abstract painting. Anything can really be understood differently with time, in 20 years what does this work mean?
"I think misunderstanding makes your imagination go further."
Previous winners of the Turner Prize include Damien Hirst, Antony Gormley and video artist Elizabeth Price, who took last year's award.
It was established in 1984 to celebrate new developments in contemporary art and is given to a British artist under 50, who judges believe has put on the best exhibition of the last 12 months.
Works by all four shortlisted artists have been on display in the grounds of an old army barracks at Ebrington for the past month, the first time the annual art event has been held outside England.
This year's jury was chaired by Tate Britain director Penelope Curtis and includes the curator Annie Fletcher and the writer and lecturer Declan Long.
Commenting on Prouvost's installation, judges said: "Building on personal memory, it weaves together fact, fiction, art history and modern technology.
"Using film in a completely contemporary way, she takes viewers to an inner world, while making reference to the streaming of images in a post-internet age."
Prouvost graduated with a Fine Art degree from renowned British art college Central Saint Martins in 2001.
Alex Schady, who currently leads the BA course at Central Saint Martins, called her win "really exciting".
"The work has a quirky use of humour and combines complex narratives with a strong sense of storytelling to produce a body of work that is both surprising and unpredictable," said Schady.
"She is a very deserving winner and I'm delighted that her work is receiving such positive public attention."
Each of the other shortlisted artists will receive £5,000, and the Turner Prize exhibition will be on display at the Ebrington Barracks until 5 January.
The ceremony was screened live on Channel 4, presented by Lauren Laverne.
Prouvost told Laverne her baby daughter Celeste would not hamper the celebrations.
"We'll go dancing," said Prouvost. "She loves it when it is noisy."