Her inventive, carefully-crafted and hard to categorise works saw off the challenge from nine other contenders from around the world, said a press release Wednesday evening.
India's U.R. Ananthamurthy was also one of the contenders for the prestigious prize.
The judges were Christopher Ricks, Elif Batuman, Aminatta Forna, Yiyun Li and Tim Parks. They recognised that "crafting spare, philosophical and original works, however short, is not for the lazy at all but takes time, skill and effort".
The prize is worth 60,000 pounds and is awarded for an achievement in fiction on the world stage and "Davis's achievements are writ large despite often using startlingly few words (some of her longer stories only stretch to two or three pages)".
"Her work has the brevity and precision of poetry."
Christopher Ricks, chairman of the judges, said her "writings fling their lithe arms wide to embrace many a kind. Just how to categorise them? They have been called stories but could equally be miniatures, anecdotes, essays, jokes, parables, fables, texts, aphorisms or even apophthegms, prayers or simply observations".