"It feels fantastic, couldn't be better," Östlund told Swedish news agency TT after winning the Palme d’Or.
In the film, the Danish actor, Claes Bang, plays a museum director who is desperate to put his gallery on the map. He exhibits an installation called “The Square” which then leads to a sequence of weird and disturbing events.
Östlund is the first Swede to win the coveted film prize since Alf Sjöberg in 1951.
Meanwhile, “The Square” is the first Swedish production to win since “The Best Intentions”, by Danish director Bille August, back in 1992.
Daniel Hellberg, who plays one of the cynical PR creatives behind the exhibit, told Radio Sweden that Östlund's directing style was "unique".
"He has a very unique way of directing people. He pretty much improvises all the scenes without any manuscript," Helldin said.
Hellberg, who works as an advertising creative in real life, was cast along with his real-life colleague Martin Sööder to play exaggerated satirical versions of themselves.
"He wanted to hear the typical lingo that advertises use in meetings," he said. "We play these cynical, crazy versions of ourselves in real life. They're kind of scary people."
Back in 2014, Östlund impressed juries in Cannes with the philosophical comedy “Force Majeure” about a father who impulsively runs and abandons his family when an avalanche narrowly misses the ski restaurant they were eating in. But Östlund failed to take home the big prize for that film.
Pia Lundberg, head of the international division of the Swedish Film Institute, called the victory "historic".
"Ruben's films are a mix of social experiment and the literary ideas tradition, and in that intersection he is unique, not only in Sweden but in the world," she said. "In addition, his films make the audience uncomfortable – in the best possible way."
The film will be released in cinemas in Sweden starting on August 25.