Martin and his group won the night's top award at The Ryman Auditorium, while The Boxcars took home a leading four awards.
"I want to thank all the other nominees ... for losing," Martin joked after accepting the award.
Martin, who is best known as a comedian and writer, is also an accomplished banjo player with two albums of mostly original music and a high-profile series of performances. Entertainer of the year goes to the act that does the best job representing the genre.
"It really means a lot, sort of like winning two Oscars," Martin said afterward. "It's something we work very hard at and I kind of started from scratch. I mean I've been playing banjo for 50 years, but performing in a band I've never done. I've done it for about two years ... You know, the hardest part was talking and tuning."
This is Martin's first IBMA award. In addition to The Boxcars' four awards, three other acts, Michael Cleveland, The Gibson Brothers and a collaborative effort among J.D. Crowe, Doyle Lawson and Paul Williams, each won two awards.
The Associated Press contributed to this report.