The book, which borrows from the techniques of fresco painting, won for its innovations in form and its inventive publication.
The novel was published in two versions, both with the same cover but with the main halves switched.
It focuses on the lives of a grieving teenage girl in the present day and a renaissance artist in the 1460s.
It is the second year for the prize, which was created by Goldsmiths, University of London and the New Statesman.
The £10,000 prize is open to novels written by authors from the UK or the Republic of Ireland that are “deemed genuinely novel” and which embody “the spirit of invention that characterises the genre at its best”.
Chair of Judges Francis Spufford said they were proud to give the prize to “a book which confirms that formal innovation is completely compatible with pleasure – that it can be, in fact, a renewal of the writer’s compact with the reader to delight and to astonish.”
Speaking ahead of the award ceremony Smith called the prize “about the thing closest to your heart if you work with the novel as a form, if you’re interested in the form of the novel and the form of language.
“The point of this is that it’s about language, about all the things a novel can do, not just some of the things a novel can do. That’s what this prize is about. It’s about the multi-variousness, the everything the novel can do is included in this prize.”