"Devolved Parliament", in which chimpanzees replace politicians in the House of Commons, more than comfortably surpassed its estimated price tag of 1.5 million to 2 million pounds, with the auctioneer declaring "history being made" at one point during the sale which was streamed live.
After bidding that lasted some 13 minutes, the 2009 artwork from a private collection sold to loud applause for a hammer price of 8.5 million pounds, to which fees are added giving a final price of 9,879,500 pounds ($12.2 million).
"Record price for a Banksy painting set at auction tonight. Shame I didn't still own it," Banksy wrote on his Instagram feed beside a post quoting art critic Robert Hughes about the value of artworks.
"... The price of a work of art is now part of its function, its new job is to sit on the wall and get more expensive. Instead of being the common property of humankind the way a book is, art becomes the particular property of someone who can afford it," the Instagram post quoted Hughes as saying.
Before Thursday's sale, the auction record for a Banksy work was $1,870,000 for "Keep it Spotless" which sold at Sotheby's in New York in 2008, according to the auction house.
"Devolved Parliament" measures 13 feet (4 m) long, making it Banksy's largest known canvas, according to Sotheby's.
Despite being painted in 2009, many commentators had drawn comparisons to current-day politics, namely the increasingly brutish exchanges in the House of Commons over Britain's pending departure from the European Union, or Brexit.
The Bristol-born artist, who keeps his identity a secret, is known for his political or social-commentary graffiti work that has popped up in cities around the world.
Thursday's sale came a year after another Banksy canvas, "Girl with Balloon", shredded itself in front of shocked onlookers at a Sotheby's auction just as it was sold.
