"Mohammed Assaf is the Arab Idol!" called out the presenter of the show, modelled on the Western Pop Idol contest, as coloured confetti rained down on the cheering audience.
Immediately after his win, Assaf was named Youth Ambassador for UNRWA, the UN's agency for Palestinian refugees and named Palestinian goodwill ambassador by president Mahmud Abbas.
The handsome, tuxedo-clad Assaf, 23, won after weeks of anticipation from his army of followers, who had been glued to big screens in cafes and restaurants across Gaza and the occupied West Bank, listening as his powerful voice propelled him through the competition every weekend.
His mother, wearing a traditional Palestinian embroidered dress, wept as she wrapped the Palestinian black, green, white and red flag around her shoulders.
Spontaneous celebrations broke out in Gaza, Assaf's home, and in the West Bank.
"The mood is undescribable. Everyone is celebrating. Thank you, Mohammad Assaf, for bringing joy to our hearts. We haven't felt this joy in a long time," Gaza resident Mohammad Dahman told AFP via the Internet.
In Israeli-occupied East Jerusalem, celebrations turned sour as Palestinian young people clashed with Israeli police. Several people were arrested.
In northern Lebanon, Palestinian refugees in the Beddawi camp fired gunshots into the air and took to the streets, honking their car horns to celebrate Assaf's win.
Across the southern city of Sidon, there were celebrations too, said an AFP journalist.
Born in Misrata, Libya, Assaf grew up in the overcrowded Khan Yunis refugee camp in the Gaza Strip, one of the world's poorest and most densely-populated places where Israel severely restricts the movement of people, goods and financial aid.
The Islamist Hamas movement, which has controlled Gaza since 2007, disapproves of what it considers un-Islamic shows, such as Arab Idol, but has not officially clamped down on support for Arab Idol or Assaf.
In a previous episode of the programme, popular Lebanese singer and jury member Ragheb Alama had described Assaf as "the best rocket" to have come out of Gaza, and as "a rocket of peace, not war".
Announcing Assaf's nomination as regional ambassador for youth minutes after his win, the agency's chief Filippo Grandi said: "All Palestinians share in his success. Mohammed's music is a universal language and speaks to all of us. How fantastic that a Palestine refugee from Gaza should bring us all together in this way."
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