"I feel very lucky, I still can't quite believe it," the Melbourne writer told AAP.
The $60,000 prize was awarded at a ceremony held online on Wednesday.
Bodies of Light tells the life story of a woman who suffered systemic abuse growing up in state care in the 1980s, and who moves to Canada under a new identity.
Ms Down began writing the book in 2017, reading accounts from parliamentary inquiries into systemic abuse and conducting interviews with survivors keen to talk.
But even with two well-regarded books already under her belt - the first published when she was 25 - at times she believed she might not ever finish Bodies of Light.
"I always have the sensation that I'm learning to do this for the first time ... I hope I'm trying to challenge myself to write things that push me in some way," she said.
At 448 pages, it's much longer than her previous works and has drawn comparisons to Hanya Yanagihara's 2015 epic A Little Life.
Ms Down promises Bodies of Light is nowhere near as dark as Yanagihara's trauma novel, but said she would not hold it against anyone if they chose happier bedtime reading.
"It's a good one to read when you're in the right emotional state, you're feeling secure or you need a really good cathartic cry, a really snotty cry," she said.
While Ms Down, from Melbourne, is aware of the sales boost that comes with the Miles Franklin, she said she tries not to get caught up in the arbitrary world of book prizes.
"You have to just expect nothing and appreciate everything - while that sounds very zen I'm actually a very neurotic person - it's more like a self preservation," she laughs.
The 2022 shortlist included twice shortlisted author Michael Mohammed Ahmad and self-published writer Michael Winkler, alongside Alice Pung and two-time winner Michelle de Kretser, authors Ms Down read growing up.
"To be appearing on a shortlist alongside those names, it really just feels like a tremendous stroke of fortune," she said.
The youngest Miles Franklin winner is Randolph Stow, who was awarded the prize at the age of 23 with To the Islands in 1958.
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