The American short story writer George Saunders has won the Man Booker prize for his first full-length novel, Lincoln in the Bardo.

The book is based around a real event: the night in 1862 when Abraham Lincoln buried his 11-year-old son Willie in a Washington cemetery. Imagining the boy trapped in the Bardo – a Tibetan Buddhist term for a kind of limbo – Saunders’ novel follows the fellow dead, also trapped in the graveyard and unwilling to accept death, who observe the boy as he desperately waits for his father to return.

Lincoln in the Bardo by George Saunders review – extraordinary story of the afterlife Read more

Written almost entirely in dialogue, the novel also includes snippets of historical texts, biographies and letters, some of which contradict each other and others that Saunders, 58, created himself. In his review for the Guardian, fellow author Hari Kunzru praised Lincoln in the Bardo as “a tale of great formal daring”, adding: “[It] stands head and shoulders above most contemporary fiction, showing a writer who is expanding his universe outwards, and who clearly has many more pleasures to offer his readers.”

Accepting the prize, the 58-yearold Texan-born author made an eloquent defence of the importance of culture. “If you haven’t noticed, we live in a strange time, so the question at the heart of the matter is pretty simple,” he said. “Do we respond to fear with exclusion and negative projection and violence? Or do we take that ancient great leap of faith and do our best to respond with love? And with faith in the idea that what seems other is actually not other at all, but just us on a different day.

“In the US we’re hearing a lot about the need to protect culture. Well this tonight is culture, it is international culture, it is compassionate culture, it is activist culture. It is a room full of believers in the word, in beauty and ambiguity and in trying to see the other person’s point of view, even when that is hard.”

The chair of judges, Lola Young, described the novel as “an extraordinary piece of work. Admitting that she initially felt challenged by its layout, which is reminiscent of a screenplay, the Labour peer said she was eventually “captivated” by work which she came to regard as unique.

“The challenge is actually part of its uniqueness. It is almost saying, ‘I dare you to engage with this kind of story, in this kind of way.’ It is incredibly rewarding.

George Saunders' victory disproves Booker lore that favourites never win Read more

“For us, it really stood out because of its innovation, its very different styling, the way it, almost paradoxically, brought to life these almost dead souls in this other world. There was this juxtaposition of the very personal tragedy of Abraham Lincoln and the death of his very young son next to his public life, as the person who really instigated the American civil war. You’ve got this individual death, very close and personal; you’ve got this much wider issue of the political scenario and the death of hundreds of thousands of young men; and then you’ve got this weird state across the cemetery, with these souls who are not quite ready to be fully dead, as it were, trying to work out some of the things that plagued them during their lives.”

The author of four collections of short stories, two novellas and a long body of journalism, the Texas-born Saunders came to writing relatively late, initially training as a geophysicist. After working as a tech writer, a field in which he was rewarded for brevity, he began writing short stories. His first collection CivilWarLand in Bad Decline was published in 1996. He was awarded a MacArthur Genius grant and a Guggenheim fellowship in 2006, then won the inaugural Folio prize for his story collection, Tenth of December, in 2014.

Saunders is the second American in a row to win the Booker prize, after last year’s winner Paul Beatty. Saunders’ win falls four years after eligibility rules were changed to allow writers of any nationality writing in the English language and published in the UK. There has been fierce criticism of the rule change.

The judges took five hours to come to what Young called a “collegial”, yet unanimous choice. She denied any concerns about Saunders’ nationality, saying: “We don’t look at the nationality of the writer. Honestly it’s not an issue for us. We’re solely concerned with the book, what that book is telling us.”

The books losing out on the prize were 4321 by Paul Auster (US), Elmet by Fiona Mozley (UK), Exit West by Mohsin Hamid (UK-Pakistan), History of Wolves by Emily Fridlund (US) and Autumn by Ali Smith (UK).

With 144 novels submitted for the 2017 prize, Saunders’ novel was among a starry, 13-book longlist, a rarity in recent years as more debuts and less-established authors have been named as contenders. This year’s longlist included Arundhati Roy, a previous winner of the Booker, as well as authors who had also won the Pulitzer, the Costa, the Baileys, the Folio, the Impac and the Goldsmiths prizes.

The £50,000 win, announced at a black-tie dinner at the Guildhall in London, was yet another success for an independent publisher; released by Bloomsbury, Lincoln in the Bardo is the third win in a row for an independent, after two consecutive wins for Oneworld publications.

George Saunders and the Baileys women's prize – books podcast Read more

Sales for Saunders’ novel have trailed behind Smith’s in the UK, with Lincoln in the Bardo selling about 10,000 copies so far, compared with 50,000 of Autumn. Saunders can expect his sales to skyrocket; last year’s winner, The Sellout, has now sold more than 360,000 physical copies, with sales in the week after the prize announcement jumping by 658%.

Young’s fellow judges this year were the writer and critic Lila Azam Zanganeh, the novelist and poet Sarah Hall, the artist and author Tom Phillips, and the travel writer and novelist Colin Thubron. Saunders was presented with the award on Tuesday night by the Duchess of Cornwall.