The win for "Precious" follows a sensational debut earlier this year at Sundance, where the film claimed the grand jury and audience awards.
Piers Handling, co-director of the Toronto festival, said the movie's remarkable success is not unlike last year's surprise sensation, "Slumdog Millionaire".
"I think people want to see real stories about real people who are being tested in some kind of way and at the end of the day, hopefully, come out ahead of the game," said Handling. "As I think about it, it probably bears a lot of resemblance to last year's 'Slumdog Millionaire."'
The film revolves around an obese teen who has been impregnated for the second time by her father, and stars Gabourey (Gabby) Sidibe, Mo'Nique, Lenny Kravitz and Mariah Carey. Tyler Perry and Winfrey serve as executive producers.
"Slumdog Millionaire," an indie film set in the slums of Mumbai, came from virtually nowhere to claim the audience choice award at the Toronto Film Fest and went on to sweep the big categories at the Oscars.
The People's Choice award includes a 15,000 Canadian dollar ($14,000) prize, which was accepted for "Precious" on behalf by Laurie May, co-president of production company Maple Pictures.
"So far, we're two for two," boasted May, referring to the two-time audience win.
Other prizes handed out Saturday included the award for best Canadian first feature film, which went to Quebec's Alexandre Franchi for "The Wild Hunt," set in the fantasy-reality of a large role-playing game. The award for best Canadian short film went to Pedro Pires for "Danse Macabre," which was based on a concept by Robert Lepage.
Nadda, who gets CA$30,000 ($28,000) as part of the best Canadian feature prize for "Cairo Time," said her film very nearly didn't get made.
She noted that roughly CA$1.5 million ($1.4 million) in funding fell through just two weeks before filming was to start in Egypt. She recalled getting the news from her producer saying the production, starring Patricia Clarkson and Tom McCamus, was dead.
"I went into shock and called him back and I was crying and I was like, `I'm begging you, I'm begging you, I'm begging you - please figure this out," recalled Nadda, who also wrote the screenplay.
In 48 hours, they were back on track with the help of Telefilm.
"This is why I feel like I've won the lottery, I really have," said Nadda, who has made 18 films, but makes her debut appearance at the fest with her tale about a married magazine editor who flirts with having an affair.
New award categories this year included a midnight madness prize, which went to Australian Sean Byrne's horror "The Loved Ones," and a people's choice award for documentary films, which went to "The Topp Twins" from Winnipeg's Leanne Pooley, about New Zealand lesbian country-and-western singers.
The awards wrapped up 10 days of movie madness that included more than 300 projects and megastars including George Clooney, Matt Damon, Julianne Moore, Penelope Cruz and Nicolas Cage.
Saturday's closing night film was to be "The Young Victoria" starring Emily Blunt and directed by Quebec's Jean-Marc Vallee, who helmed 2005's "C.R.A.Z.Y".