The novel that won the first Nebula Award for Best Novel in 1966 was Frank Herbert's 'Dune'.
'Dune' was first published in 1965 by Chilton Company, and the inaugural Nebula Awards were presented in 1966 for works from that publication year. The award established the Science Fiction and Fantasy Writers Association's recognition of outstanding speculative fiction, making Herbert's victory a landmark in science-fiction publishing.
The novel follows Paul Atreides after his family takes control of the desert planet Arrakis, the only known source of the valuable spice melange. Its combination of ecology, politics, religion, economics and dynastic conflict helped make it one of the genre's defining works.
A common source of confusion is the award-year convention. Modern Nebula listings often identify the inaugural Best Novel winner under 1965, the year of publication, while historical accounts describe the first award ceremony as occurring in 1966. In either convention, 'Dune' is the canonical first winner.