Mahmoud Sabbagh's directorial debut picked up the Prize of the Ecumenical Jury at the Berlin International Film Festival.
The prize for Barakah Meets Barakah is especially revered given the strict rules governing film production in Sabbagh's home country, including a blanket ban on cinemas.
It meant that the premiere for Sabbagh's film was last night in Berlin rather than Riyadh.
"Saudis watch and consume a lot of art so this is our chance to produce art, and my film is about public space, it's about individual freedom," Sabbagh said.
Barakah Meets Barakah was one of 18 films nominated for the Best First Feature Award at Berlinale, and in the end won the Prize of the Ecumenical Jury.
"This is the first award to a Saudi film in major film festivals," the film's twitter account announced.
Saudi-German production Wajda by director Haifaa al-Mansour also won critical acclaim and a number of awards when it was released in 2012.
Both films have helped show another side of day-to-day life in Saudi Arabia.
Sabbagh's light-hearted "coming of age" romance tells the story of a young run-of-the-mill, mid-level civil-servant, Barakah, who tries to woo the adopted daughter of a rich family, Bibi.
In it, Barakeh Meets Barakeh looks to highlight the social obstacles faced by young couples in a country where women's activities are strictly controlled.
Despite restrictions on screening, the director said film-on-demand services in Saudi Arabia helped his work to be seen in other countries.
But most of all Barakeh Meets Barakeh wanted to reach women in Saudi Arabia.
"If the girls in Saudi feel that they can relate and they could laugh at Bibi's experiences and her own struggles, it would be basically the point of the film," said Saudi actress Fatima al-Banawi, who played Bibi.
Migrant documentary wins prestigious prize
The highest-award of the 2016 festival went to an Italian documentary chronicling the dangerous journeys of refugees - including many Syrians - crossing the hazardous Mediterranean Sea to Europe in hope of a better life.
Fire at Sea [Fuocoammare], directed by Gianfranco Rosi, was awarded the prestigious Golden Bear award for best film at the festival on Saturday.
The film focuses on life on the Italian island of Lampedusa, the first landing point for many migrants crossing the Mediterranean.
The movie contrasts the lives of native islanders with those of the refugees who long for peace, freedom and happiness.
The dead bodies pulled out of the water highlights this contrast.
The filmmaker himself shot footage of coast-guard patrols answering distress calls of dinghies and boats packed with people, many of whom are found dead from suffocation of diesel fumes.
"It's a daring hybrid of captured footage and deliberate storytelling that allows us to consider what documentary can do," said Meryl Streep, who headed the jury.
"It demands its place in front of our eyes, and compels our engagement and action. It is urgent, imaginative and necessary filmmaking," she added.
"It's not acceptable that people die crossing the sea to escape from tragedies," the film's director said.