Angie Thomas won the £5,000 award for The Hate U Give, about a teenage girl who witnesses the police shooting of her unarmed best friend.
The book takes its title from rapper Tupac Shakur, who used the phrase to generate the acronym THUG.
A film version starring Anthony Mackie and rapper Common is now in production.
Originally written as a short story, The Hate U Give was inspired by a real-life police shooting in 2009
“I want to help people understand why we say black lives matter,” Thomas told BBC Breakfast last year.
“The Hate U Give should have a readership far beyond a core audience of young adults,” said James Daunt, Waterstones’ managing director.
“Ours is a children’s prize, but there is no upper age limit to being stunned by beautiful writing of this visceral power.”
The Hate U Give beat two other category winners to this year’s prize, presented on Thursday by Children’s Laureate Lauren Child at a ceremony in London.
Nevermoor by Australia’s Jessica Townsend came top in the younger fiction category, while The Secret of Black Rock by Joe Todd-Stanton was named the year’s best illustrated book.