Jury chair Amanda Foreman said nationality had nothing to do with the choice.
“It did not weigh on the jury that Paul was American,” said Foreman, who herself is American and based in New York.
“It shows that there is a global reach to this prize,” she added.
The Sellout is Beatty’s fourth novel and earlier this year won the National Book Critics Circle Award in the US.
It is narrated by Bonbon, an African-American resident of the run-down town of Dickens in Los Angeles county, which has been removed from the map to save California from embarrassment.
Bonbon is on trial for attempting to reinstitute slavery and segregation in the local high school as a means of bringing about civic order.
The judges said that “the framework of institutional racism and the unjust shooting of Bonbon’s father at the hands of police are particularly topical”.
Five other authors were nominated for the prize in a shortlist celebrated for taking risks and tackling tough subjects.
Foreman said the judges were “excited by the willingness of so many authors to take risks with language and form”.
“The final six reflect the centrality of the novel in modern culture – in its ability to champion the unconventional, to explore the unfamiliar, and to tackle difficult subjects.”
The favourite had been Canadian Madeleine Thien with her third novel, Do Not Say We Have Nothing, a weighty 480-page book that portrays a young woman recounting her family’s past in revolutionary China.
British author Graeme Macrae Burnet’s His Bloody Project had also been tipped by bookmakers. His second novel is set in 19th
rural Scotland and tells the story of a young and poor tenant farmer who murders the village administrator and his family.
The book’s Glasgow-based publisher is run by just two people and is struggling to meet demand.
Other novels shortlisted include Hot Milk by South African-born British author Deborah Levy, who depicts a torturous relationship between mother and daughter in a Spanish village.
Canadian-British author David Szalay’s All That Man Is traverses different countries to follow the lives of nine men in a tale about contemporary Europe.
Judges called it “a post-Brexit novel for our time”.
The final shortlisted book Eileen, the debut novel by American Ottessa Moshfegh, follows a disturbed young woman who cares for her alcoholic father and works in a youth prison.
Paul Beatty is the first US author to win the Man Booker Prize, the world’s most lauded English-language literary award.