David Grossman’s “ambitious high-wire act of a novel”, A Horse Walks into a Bar, set around a standup comic’s rambling and confessional routine in an Israeli comedy club, has won the Man Booker International prize for the year’s best fiction in translation.

Set in a small Israeli town, the novel is focused entirely on the act of comedian Dovaleh Greenstein. Taking to the stage to needle his audience with vulgar and aggressive jokes, Greenstein’s repellent performance begins to crumble as he reveals a fateful and gruesome decision he once made, which has haunted him ever since.

“David Grossman has attempted an ambitious high-wire act of a novel, and he’s pulled it off spectacularly,” said the chair of judges and director of the Edinburgh international book festival Nick Barley. “A Horse Walks into a Bar shines a spotlight on the effects of grief, without any hint of sentimentality. The central character is challenging and flawed, but completely compelling. We were bowled over by Grossman’s willingness to take emotional as well as stylistic risks: every sentence counts, every word matters in this supreme example of the writer’s craft.”

In his Guardian review, author Ian Sansom wrote: “This isn’t just a book about Israel: it’s about people and societies horribly malfunctioning. Sometimes we can only apprehend these truths through story – and Grossman, like Dovaleh, has become a master of the truth-telling tale.”

Grossman, a bestselling writer of fiction, nonfiction and children’s books who has been translated into 36 languages, will share the £50,000 prize with his English translator, Jessica Cohen. Cohen had previously worked with Grossman on 2008’s To the End of the Land, which was deemed “without question one of the most powerful and moving novels I have ever read” by British critic Jacqueline Rose.

Born and still based in Jerusalem, Grossman has long been recognised as one of the world’s great novelists, with awards including the French Chevalier de l’Ordre des Arts et des Lettres, Germany’s Buxtehuder Bulle, Rome’s Premio per la pace e l’azione umanitaria, the Frankfurt peace prize, and Israel’s Emet prize.

He was announced as the winner at a ceremony at the V&A Museum in London on Wednesday night. His novel was selected as the winner from 126 titles, which were whittled down to a 13-book longlist and a six-book shortlist, pitting him against writers from Denmark, France, Norway and Argentina. Fellow Israeli heavyweight Amos Oz was among the final contenders, who also included the Danish author Dorthe Nors and Argentinian debut author Samanta Schweblin.

Barley’s fellow judges – authors Daniel Hahn, Elif Shafak and Chika Unigwe, and poet Helen Mort – praised Grossman’s novel as “an extraordinary story that soars in the hands of a master storyteller”. They added: “Written with empathy, wisdom and emotional intelligence, A Horse Walks into a Bar is a mesmerising meditation on the opposite forces shaping our lives: humour and sorrow, loss and hope, cruelty and compassion, and how even in the darkest hours we find the courage to carry on.”

This is only the second year that the Man Booker International prize has been awarded to a single book. Last year, the prize was won by South Korean novelist Han Kang and translator Deborah Smith for The Vegetarian. Since Han’s win in 2016, Korean translated fiction sales have increased by 400% in the UK.

Prior to 2016, the prize was awarded biennially to a writer for an entire body of work and was won by Ismail Kadare in 2005, Chinua Achebe in 2007, Alice Munro in 2009, Philip Roth in 2011, Lydia Davis in 2013 and László Krasznahorkai in 2015.