Director Neeraj Ghaywan broke the news on Twitter
An overjoyed Richa Chadha, who features in a key role in the film, tweeted that she felt "blessed."
Showcased in the Un Certain Regard section at the movie gala, Masaan received a five-minute standing ovation post its screening here, leaving Richa and Neeraj Ghaywan tearful.
The film, which is Neeraj Ghaywan's debut feature project, is set in the backdrop of Varanasi and follows the stories of four people from a small town.
Masaan also co-stars features Shweta Tripathi, Sanjay Mishra and Vicky Kaushal.
An Indian-French collaboration, the film has been co-produced by Manish Mundra of Drishyam Films, Macassar Productions, Phantom Films, Sikhya Entertainment, Arte France Cinema and Pathe productions.
The top prizes for the main selection at the gala will be awarded on Sunday night during the closing ceremony at the Palais des Festivals in Cannes. Jury presidents Joel and Ethan Coen will announce the winners.