“It’s very amazing to me that the long, solitary process of writing a novel should lead to a moment like this, said Mr Hollinghurst when accepting the prize.
The book, set in the 1980s, tells the story of 20-year-old Nick Guest, an Oxford graduate who takes a room in the home of an ambitious Conservative politician and his wealthy family and the height of Margaret Thatcher’s power.
As the novel unfolds, he explores a world of cocaine and gay cruising set against a background of 1980s social problems, including AIDS.
In the book’s most memorable scene, the hero dances with Mrs Thatcher at a party while he is drugged up to the eyeballs.
“This was an incredibly difficult and close decision,” said the chairman of the judges, former Culture Minister Chris Smith.
Mr Smith, Britain’s first openly gay cabinet minister, said of the panel’s decision: “It resulted in a winning novel that is exciting, brilliantly written and gets under the skin of the Thatcherite 80s”.
“The search for love, sex and beauty is rarely this exquisitely done,” he said.
Organisers confirmed it is the first time in the 36-year history of the Booker that a gay novel has won the prize.
It was the 50-year-old writer’s second attempt for the Booker after being nominated ten years ago.
The book, Mr Hollinghurst’s fourth, explored the era shaped by Mrs Thatcher’s free-market ethos.
“It was such a ghastly period to live through,” said the author.
“To revisit that period and its values was lowering. We’re very much living with the consequences of what happened in the Thatcher years now.”
Mr Hollinghurst studied at Oxford and was named as one of Britian’s Best Young Novelists by the journal Granta in 1993.
He has served as deputy editor of the Times Literary Supplement.
The STG50,000 ($A124,564) prize bestows instant literary fame on the winner, who can look forward to hitting bestseller lists around the world.