The singer's 2011 single 'Jealousy' saw off competition from 11 other nominees, including One Direction's 'What Makes You Beautiful', The Saturdays' 'All Fired Up' and Little Mix's 'Wings'.
Young was up against Marina and the Diamonds' 'Power and Control' in the final, but was voted the final victor.
Richard X - who produced 'Jealousy' - was present at the ceremony to collect the award, which consists of a £20 note.
The Saturdays won last year's award with 'Higher', while Example's 'Kickstarts' took home the prize in 2010.
The Popjustice Twenty Quid Music Prize is an annual event that coincides with the Mercury Prize announcement.
Watch the music video for Will Young's 'Jealousy' below: