Salim Dau and Hiam Abbas in Gaza Mon Amour
The film, directed by twin Palestinian brothers Arab and Tarzan Nasser, sees a fisherman (Salim Daw) attempt to woo a seamstress, played by Hiam Abbass, who picked up the best actress accolade in the awards, which are voted on by 160 critics from 63 countries.
The best screenplay gong went to Tunisian director Kaouther Ben Hania for his Oscar-nominated The Man Who Sold His Skin, which considers the "commodification of a Syrian refugee.
Lift Like A Girl, a fly-on-the-wall study of an Egyptian weightlifting training gym, directed by Mayye Zayed won best documentary.
The awards were presented by the Arab Cinema Center, which created the initiative, during Cannes.