US mob drama The Departed has won four Oscars, including best film and best director for Martin Scorsese, who had missed out on five previous occasions.
Dame Helen Mirren and Forest Whitaker collected best actress and actor, and there were three Academy Awards for dark fairytale Pan's Labyrinth.
Alan Arkin won best supporting actor for Little Miss Sunshine, which was also best original screenplay.
And Jennifer Hudson earned best supporting actress for Dreamgirls.
Scorsese said he was "overwhelmed" as he clutched his award and asked: "Could you double-check the envelope?"
He received his first directing nomination - for Raging Bull - in 1981, but was beaten that year by Robert Redford's Ordinary People.
"So many people over the years have been wishing this for me - strangers. I walk in the street and people say something to me: 'You should win, you should win.'"
Dame Helen, who had earlier said it was "amazing" to be nominated for best actress for The Queen, was thrilled about her victory.
"All kids love to get gold stars, and this is the biggest and the best gold star that I have ever had in my life," she said.
MULTIPLE OSCAR WINNERS
4: The Departed
3: Pan's Labyrinth
2: An Inconvenient Truth
2: Little Miss Sunshine
Whitaker - who won for his portrayal of Ugandan dictator Idi Amin in The Last King of Scotland - struggled for words before pulling out a pre-written speech.
"When I was a kid, the only way I saw movies was from the back seat of my family's car at the drive-in.
"It wasn't my reality to think I would be acting in movies - so receiving this honour tonight tells me that it's possible."
Environmental film An Inconvenient Truth was best full-length documentary, and Melissa Etheridge's I Need to Wake Up - one of the tracks from that movie - won best original song.
Dreamgirls lost out in that category, despite having three of the five nominations, but it did win best sound mixing.
There was a sound editing award for Letters From Iwo Jima, while Babel had top original score.
And staying with soundtracks, a lifetime achievement Oscar was given to Italian composer Ennio Morricone for his "magnificent and multi-faceted contributions to the art of film music".
Pirates of the Caribbean: Dead Man's Chest was presented with the Academy Award for best visual effects, while Happy Feet was best animated film.
Also receiving Oscars were German production Das Leben der Anderen (The Lives of Others), named best foreign-language film, plus Marie Antoinette, for best costume design.
The Danish Poet was best animated short film, while West Bank Story collected best live-action short film.
The Blood of Yingzhou District, a Chinese film about the effects of Aids, won best documentary short.
US comedy star and talk show host Ellen DeGeneres presented the glittering ceremony at the Kodak Theatre in Los Angeles.
She drew applause by saying that hosting the Oscars had been "a dream of mine since I was a little girl".
And she teased the gathered nominees by joking that "everything is on the line for you", reminding them not to make fools of themselves because "there's a billion people watching right now".