Imperial Life In The Emerald City, an account of life in Baghdad's Green Zone, has won the Samuel Johnson Prize for non-fiction.
Chandrasekaran reported from Iraq for The Washington Post
US journalist Rajiv Chandrasekaran picked up the £30,000 prize at a ceremony in London on Monday night.
His book reports on the US headquarters in Iraq during the year after the fall of Saddam Hussein.
It beat five others books, including Ian Burum's Murder in Amsterdam about the murder of film-maker Theo van Gogh.
Chandrasekaran, the former Baghdad bureau chief for The Washington Post, drew on hundreds of interviews and internal documents for his book.
Speaking as he accepted the award at London's Savoy Hotel, he said the way things had turned out in Iraq led him to write the book.
"As an American I thought, maybe controversially, that we could pull it off in Iraq, with the right resources, and the right people and a plan, we could create a more peaceful and stable Iraq," he said.
"It was my disappointment that compelled me to write this book."
His book details a place cut off from wartime realities, with posh villas and sparkling swimming pools, well-stocked bars, discos, shopping centres selling porn, and all-you-can-eat buffets piled high with pork.
Baroness Helena Kennedy, chairwoman of the judges, said: "Imperial Life in the Emerald City is up there with the greatest reportage of the last 50 years - as fine as Hershey on Hiroshima and Capote's In Cold Blood.
"The writing is cool, exact and never overstated and in many places very humorous as the jaw-dropping idiocy of the American action is revealed.
"Chandrasekaran stands back, detached and collected, from his subject but his reader is left gobsmacked, right in the middle of it."
The other shortlisted books were Having it so Good: Britain in the Fifties by Peter Hennessy; Daughter of the Desert by Georgina Howell; Brainwash by Dominic Streatfeild; and The Verneys by Adrian Tinniswood.