The winning artwork Ngayuku Ngura (My Country) was chosen ahead of a field of 30 finalists from every state.
The dot painting in tones of red and purple features an expansive arc across the large canvas, a design connected to the ancestral stories of the Yankunytjatjara lands, part of the APY lands in South Australia.
"I was really surprised to hear I was the winner," the artist told AAP after travelling from remote Indulkana to Hobart for Friday's announcement.
"My painting is connected to the Tjukurpa (ancestral stories) that I know, but also my paintings are an extension of who I am, and how I interpret my place in the world," she said in her artist's statement.
One of Australia's richest art prizes, the competition is in its sixth year, with prize money equal to that of the much-loved Archibald.
The Hadley's Prize has attracted work from the country's top painters, according to one of the judges, acclaimed artist Wendy Sharpe.
Even if people don't know the sacred stories behind the winning work, they will feel its vibrancy if they take the time to have a good look, she said.
"It really is like a living landscape, pulsating, alive, swirling - you can dive in there, you're surrounded by it," she said.
A strong theme for the 2023 finalists was the impact of humans on the environment.
The winner of the $1000 packing room prize, Joshua Andree's Once Still Water (Requiem for a Lake) is a melancholy scene of Tasmania's west coast, broken by lurid orange paint representing acidic pollution from mining.
In Amanda Johnson's painting titled Stranglehold, Otways, introduced species overrun native trees, while Joan Ross's painting shows a colonist leaning on a tree stump in a deforested landscape, titled The trees came back to me in my dreams.
There are other messages too: Denise Brady's Tjuratja represents sugar coming to Anangu country in central Australia, and her recollection of healthier traditional bush foods.
"That sugar we live on right now is a killer," she said in her artist's statement.
Other paintings have a joyful tone, with Julieanne Ngwarraye Morton's My Country and Bush Medicine Plants composed of fields of glorious colour, showing plants blooming after rain.
Joe Whyte's Through the Clouds shows a deserted urban street scene in fading light - city living means concrete and crowds in close proximity, but there's a sense of isolation too.
While most works are on canvas, there are pictures painted on antique paper and silk, and one piece is made from hand-beaten steel.
The 2023 prize attracted more than 570 entries, with half of the finalists Indigenous Australians.
This year has also seen the highest number of female finalists contending for the prize, which was co-judged by artist and curator Fiona Foley and Tasmanian artist Milan Milojevic.
A $10,000 Hadley's Residency Prize was awarded to Victorian artist Melissa Kenihan.
The finalist artworks are on display at Hadley's Orient Hotel in Hobart from Saturday, where previous winners are also on show.
AAP travelled with the assistance of Hadley's.
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