The award of the 2024 International Prize for Arabic Fiction was announced at a ceremony in Abu Dhabi.
The prize was accepted on Khandaqji's behalf by Rana Idriss, owner of Dar al-Adab, the book's Lebanon-based publisher.
Khandaqji was born in the Israeli-occupied West Bank city of Nablus in 1983, and wrote short stories until his arrest in 2004 at the age of 21.
He was convicted and jailed on charges relating to a deadly bombing in Tel Aviv, and completed his university education from inside jail via the internet.
The mask in the novel's title refers to the blue identity card that Nur, an archaeologist living in a refugee camp in Ramallah, finds in the pocket of an old coat belonging to an Israeli.
Khandaqji's book was chosen from 133 works submitted to the competition.
Nabil Suleiman, who chaired the jury, said the novel "dissects a complex, bitter reality of family fragmentation, displacement, genocide, and racism".
Since being jailed Khandaqji has written poetry collections including "Rituals of the First Time" and "The Breath of a Nocturnal Poem".
He has also written three earlier novels.
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