She is also the first UK-born winner since Hilary Mantel won in 2012, and the first female since 2013 to scoop up the £50,000 cash prize, presented by the Duchess of Cornwall.
Milkman explores an 18-year-old girl’s struggles with male encroachment and the pressures of social coercion and sectarianism in an unnamed province.
Chairman of the judging panel, philosopher Kwame Anthony Appiah, said: “I really think this is a very original novel. We had never read anything like this before.
“It’s written in an amazing voice. This is a book about more than one thing. It is about many things. It’s quite amazing.”
The novel has been welcomed as one which will “help people think about #MeToo”.
It has also been praised for having a unique first-person voice rich in the conversational language of Northern Ireland and its handling of universal problems facing women and outsiders.
Burns, 56, who was born in Belfast but now lives in southern England, said she did not set out to write a political novel, it was simply the result of inspiration.
She also said the story was not linked to #MeToo but is happy for it to be taken as an inspiration by those involved in the movement.
The writer said: “I was being told to create the girl. It was not a conscious thing.
“I saw the girl walking along the street reading Ivanhoe in what looked to me like Belfast.
“I started writing it in 2014. People bring themselves to the writing. I’m happy for it to be taken that way. But this was just what I had to write.”
She said her writing career has not been lucrative and the prize money will go towards paying off her debts.
“I struggled a lot financially. It’s partly how I write. There is a lot of waiting,” she said.
“I had to move a lot because I couldn’t afford it.”
However, she said she does not compromise on her style and will always wait to create what she needs to.
The judges said they did not consider the current prominence of Brexit’s impact on Northern Ireland on the news agenda or the gender equality debate.
They also said they did not look at it needing to be accessible to average readers “on the Tube”.
Mr Appiah, said it is a book that “will last” and was as useful for thinking about fractured societies in Lebanon and Syria as it was for the current gender debate in the West.
He said he was “resigned” to the novel being linked to the #MeToo movement, but it was more universal.
Crime writer Val McDermid, critic Leo Robson, writer and critic Jacqueline Rose and graphic novelist Leanne Shapton were the other judges for this year’s prize.