The winning artist creates complex visualizations with photography, film, video, sound and installation.
Using documentation and re-enactments she moves between playfulness and seriousness, the judges said.
Bartana divides her time between her homeland and Amsterdam and often focuses upon Israel and the Israeli situation.
She explores the details of everyday living and its rituals while relating them to the actions of the state and the constant presence of war and insecurity.
The judges awarded the prize based on her body of work from the last five to eight years, in common with all the other artists.
Professor Sarat Maharaj , who chaired the judging panel, said: "The incredibly high standard of work by the eight shortlisted artists - across painting, photography, film, video, sound, installation and drawing - made the jury's decision a difficult one.
Prof Maharaj added: "All deserve recognition and praise for work that explores issues of national identity, globalisation, consumerism, propaganda and migration.
"From Kyrgyz traders on the Great Silk Road to Taiwanese factory workers, the lives of ordinary people around the globe are made real and unfamiliar cultures are brought closer to viewers in the UK by the artists of Artes Mundi 4."
Tour guide Katherine Bujalaska shows a few of the highlights of the Artes Mundi 2010 exhibition
The award is funded by both public and private organisations, including the Welsh Assembly Government, the Arts Council of Wales and Cardiff Council.
First Minister Carwyn Jones said Artes Mundi was a "most significant and successful arts initiative".
Mr Jones said: "Its impact goes beyond Wales to the UK and to wider international arts audiences.
"Not only is it still one of the largest art prizes in the world, but it is one of the very few that is genuinely international, providing a showcase for artists from across the globe."
Examples of the artists' work will remain on show at National Museum Cardiff until 6 June 2010. The exhibition has already attracted 25,000 visitors.
Xu Bing, a Chinese artist whose work was made from dust collected on New York's streets after 9/11, was the first winner of Artes Mundi in 2003.
Last year's winner was NS Harsha, from India, whose drawings and paintings use Indian Miniaturist painting to tell stories which question the traditions of Indian culture.
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