The victory marks the first time an Israeli film wins the prestigious award.
"I dedicate this award to the thousands of people all over the world who, like me, come back from war safe and sound," the director told the audience at the closing ceremony.
"Apparently they are fine ... but inside, the memory will remain stabbed in their soul," he said.
Israeli celebration in Venice (Photo: AFP)
Maoz's film dates back to June 1982, during the first day of the first Lebanon War. The film takes place almost entirely inside an Israeli tank, while offering the point of view of young Israeli soldiers who find themselves alone in war while facing a genuine existential threat.
'Truly a dream come true'
The film's storyline, which is based on a true story, recounts the experiences of Israeli soldiers in a tank sent along with a paratroop company on a mission to scour a hostile community in Lebanon.
The forces end up trapped in the center of the razed town and barely make it out alive.
The movie was co-produced by Uri Sabag and Einat Bikel. It stars actors Michael Moshonov, Itay Tirah, Yoav Donat, Oshri Cohen, Zohar Strauss, and Dudu Tasa.
One of the film's stars, Michael Moshonov, told Ynet he hasn't stopped crying since winning the award.
"I'm simply in shock. It's an honor I couldn't have dreamed of," he said. "I took part in several festivals in my life, and you always think about winning. Yet when you really win, it's something else entirely. I'm most happy for Shmulik (film director Maoz.) We had a feeling this movie is something special. It's a divine feeling, truly a dream come true."
Reuters contributed to the story