Sherlock's Martin Freeman presented Northumbrian group The Unthanks with album of the year at the BBC Radio 2 Folk Awards.
Their studio release Mount The Air is an ambitious work acclaimed by music critics for its 10-minute title track. The band also closed the event with a rousing performance that included clog dancing.
Joan Armatrading rocked the Royal Albert Hall as she received her lifetime achievement accolade. Joan, 65, is best known for songs including Love And Affection, Willow, Drop The Pilot and Me Myself I.
Born in Saint Kitts in the Caribbean, she has been one of the enduring voices in British music since the 1970s, blending folk, rock, blues and jazz in her compositions.
Norma Waterson was also a recipient of a lifetime achievement award. The Hull-born singer first appeared on the folk scene in the early 1960s with The Watersons and her influence has been felt throughout British folk music for decades.
Now in its 17th year, the BBC Radio 2 Folk Awards also saw the late Sandy Denny inducted into the hall of fame.
The singer and songwriter, who died in 1978 at the age of 31, remains best known as the lead singer of British folk rock band Fairport Convention.
A special tribute to Sandy by New York-born Rufus Wainwright, and many more, was just one of the highlights at the Wednesday night event.
Rufus, backed by musicians that included members of Fairport Convention, moved attendees with a rendition of Sandy's composition, Who Knows Where The Time Goes?
The evening kicked off with the John McCusker Band, with performances also coming from Dire Straits guitarist Mark Knopfler and Mercury Award-nominated Sam Lee.
Dublin folk band Lynched also entertained the crowd before the evening culminated with The Unthanks.
Awards were presented by a host of famous folk fans, including Matt Berry of Toast Of London fame, musician Richard Hawley, Graham Coxon from Blur, War Horse author Michael Morpurgo and 1960s star Sandie Shaw.
Bob Shennan, controller of BBC Radio 2, 6Music and Asian Network and director of BBC Music, said it had been "a wonderful night".
"What better way to celebrate the thriving folk music scene than a wonderful night in the impressive surroundings of the Royal Albert Hall."
He added: "It was a fitting way to recognise the huge wealth of talent and I'd like to congratulate the winners of these prestigious accolades. Here's to next year!"
BBC Radio 2 Folk Awards: winners
Best album - Mount The Air, The Unthanks
Folk singer of the year - Rhiannon Giddens
Best duo - Kathryn Roberts & Sean Lakeman
Best group - The Young'uns
Musician of the year - Andy Cutting
Best original track - Mackerel, The Rheingans Sisters
Horizon award - Sam Kelly
Best traditional track - Lovely Molly, Sam Lee
Lifetime achievement awards - Joan Armatrading and Norma Waterson
Young folk award - Brighde Chaimbeul
Good tradition award - John McCusker
Hall of fame inductee - Sandy Denny
The BBC Radio 2 Folk Awards will be available to watch on BBC iPlayer from April 28.