NSW artist Ben Quilty has won Australia's most prestigious portraiture prize, the Archibald, with his painting of esteemed artist Margaret Olley.

Quilty was chosen from more than 800 entries and 41 finalists to win the $50,000 prize, now in its 90th year.

Born in Sydney in 1973, Quilty was named runner-up in the 2009 Archibald and has been a finalist six times.

He embraced Olley after he was awarded the prize at the Art Gallery of New South Wales in Sydney.

Quilty said he first met the elderly artist when she was a guest judge for the 2002 Brett Whiteley Travelling Art Scholarship, which he won.

"It's quite moving to be here today," he said, adding that Olley had been a "very maternal figure to me, but most of all a friend".

Olley told reporters she had turned down Quilty's request to sit for him for years.

"I kept on saying no, and I said 'until you get over this thing you have with death, you must start celebrating life'," the frail 88-year-old said.

"I'm proud for him."

Quilty says Olley's support has been amazing.

"It's been such an amazing experience for me to have over the last eight years. To know someone like that, for her to give so freely to me," he said.

"She doesn't hold anything back. She's very direct and very honest with her opinions.

"If she doesn't like what I'm doing, she tells me to my face and I think to be a good artist you have to take those comments on in a really positive way."

Olley says she is not biased when she says Quilty's painting was the best.

"I told Ben the best painting doesn't always win. This year it has," she said.

"I saw them all on television the other night and I thought Ben Quilty is the winner in my estimation."

Quilty says his wife was certain he would win the Archibald this year.

"I told her that's seven years in a row now," he said.

Waiting for the call on Friday morning had been "nerve-wracking", he said.

Quilty, who is based in the NSW Southern Highlands, also won the 2009 Doug Moran National Portrait Prize.

His winning entry was a portrayal of singer Jimmy Barnes in oils and aerosol.

This year's Archibald finalists included previous winners Del Kathryn Barton, with her portrait of actress Cate Blanchett and her three sons, Craig Ruddy's picture of Olympian Cathy Freeman and Nicholas Harding's portrait of Hugo Weaving.

All finalists will be on display at the Art Gallery of New South Wales until June.

Last year Melbourne-based artist Sam Leach won the Archibald, with a compact portrait of musician Tim Minchin.

In other art news, Richard Goodwin was awarded the 2011 Wynne Prize for his painting Co-isolated Slave.

The $20,000 Sulman prize for best landscape went to Peter Smeeth for The Artist's Fate, while Graham Fransella won the 2011 Trustee's Watercolour Prize with Tree.