Normal People, Rooney's second novel, officially received the honour on Wednesday.
"From a deeply impressive shortlist, our winner emerged as the book without peer," the bookseller said in its announcement.
"Achingly observed, wry and moving, Normal People confirms Sally Rooney as the guiding light to our modern experience, her second novel unspooling the tale of how one life can forever change another, no matter the years that pass.
"It is a story that is absolutely universal to us all, and it is brilliant."
Normal People, which chronicles a coming-of-age love story between two friends in post-financial-crisis Ireland, came out in August in the UK to rave reviews. It is set to debut in the US in April 2019.
The novel has been called a "future classic" by The Guardian, while Rooney's editor at Faber has described the author as the "Salinger for the Snapchat generation".
Rooney herself has been referred to as "millennial fiction's most important voice" by The Independent.
Rooney's book also landed a spot on the Man Booker Prize shortlist this year and has been a "huge word-of-mouth hit", Waterstones fiction buyer Bea Carvahlo told The Guardian.
Normal People is slated to be adapted by the BBC as a drama series.
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