It comes 19 years after Atkinson won the overall Costa prize for her debut, Behind The Scenes At The Museum.
Michael Symmons Roberts also won his second Costa in the poetry category for his sixth collection, Drysalter.
Each receives £5,000, with Lucy Hughes-Hallett, Nathan Filer and Chris Riddell the other category winners.
They all go forward to compete for the main book of the year prize, which will be announced at a London ceremony on 28 January.
Life After Life follows Ursula Todd, who dies at birth in 1910, but is given several chances to live again.
Already shortlisted for the Women’s Prize for Fiction, the Costa judges called the novel “astonishing”, adding: “This book does everything you could ask for in a work of fiction and so much more.”
Roberts’ Drysalter is a collection of 150 poems, each 15 lines long.
Described as “super sonnets” by one critic, Roberts named the collection after the old high street traders called drysalters, who were dealers in gums, drugs, poisons and powders.
“The title’s also a nod to the psalter, those medieval day-books that contained psalms, but also jokes and cartoons and marginalia,” he said.
The book, which has already gained the 50-year-old £10,000 Forward Prize, beat Clive James’s translation of Dante’s Inferno to take the Costa.
Political cartoonist Riddle won the children’s book category for Goth Girl And The Ghost Of A Mouse.
As the title suggests, it is the story of Ada Goth, who lives in a haunted house with her father, Lord Goth. When two visitors, William and Emily Cabbage, come to stay, they begin to unravel a dastardly plot.
The judges described the book as “an instant classic for children of all ages”.
In the biography category, Hughes-Hallett took the title for The Pike, her study of philandering Italian poet and politician Gabriele D’Annunzio, who became a national hero and radical right-wing revolutionary.
“He was a decadent and he was a great enjoyer the good things of life – flowers and poetry and sex, he was an enthusiastic and surprisingly successful seducer,” the author told BBC Radio 4 of her subject.
The final prize went to former mental health nurse Filer, whose The Shock of the Fall was named best first novel.
It follows the experience of Matthew Holmes, a 19-year-old who is haunted after witnessing his brother’s death at a holiday park in Dorset.
Jo Brand – another former mental health nurse – has called the story, in which Matthew is “managed” by his local community health team, “one of the best books about mental illness”.
The Costa judges said: “It’s hard to believe this is a first novel – it’s so good it will make you feel a better person.”
Formerly known as the Whitbread Prize, this year’s Costa Book Awards had a record 617 entries. To be eligible, authors must have been resident in the UK for the previous three years.
The overall winner will receive £30,000.
Last year’s top prize went to Bring Up the Bodies by Hilary Mantel. It was the first book to be named as Costa book of the year and win the Man Booker Prize in the same year.
Since the introduction of the book of the year award in 1985, it has been won 11 times by a novel, four times by a first novel, five times by a biography, seven times by a collection of poetry and once by a children’s book.
This year’s ceremony will also see the winner of the Costa Short Story Award announced, as voted for by the public.
The six stories in contention for that prize can be read on the official website.