Hundreds of people waited outside the Kodak Theatre in Los Angeles to catch a glimpse of the A list actors on the red carpet.
Penelope Cruz picked up the first award of the night for best supporting actress in Woody Allen's Vicky Cristina Barcelona. The 34-year-old is the first Spanish lady to win an acting prize.
Former Oscar winners Anjelica Huston, Tilda Swinton, Goldie Hawn, Eva Marie Saint and Whoopi Goldberg presented Cruz with her gong.
Australian actor Hugh Jackman presented the show and provided plenty of light-hearted moments throughout the ceremony.
Jennifer Anniston and Jack Black presented the best animated short film award. The gong went to director Kunio Kato for La Maison en Petits Cubes.
Actor Ben Stiller sported a beard and dark glasses in homage to eccentric actor Joaquin Phoenix. He presented the cinematography gong to Slumdog Millionaire's Anthony Dod Mantle with Natalie Portman.
Singer Beyonce and Jackman performed a montage of musical hits together on stage.
Heath Ledger's father, mother and sister collected his award for best supporting actor. The star, who died last year, is only the second performer to be awarded an Oscar posthumously.
Producer Simon Chinn (c) and director James Marsh (r) won the best documentary award for Man on Wire. The film's subject, performance artist Philippe Petit (l), balanced the trophy on his chin.
British film Slumdog Millionaire won eight awards. Ian Tapp, Richard Pryke and Resul Pookutty won best sound mixing, Anthony Dod Mantle scooped the best cinematography prize and Chris Dickens took best editor.
Kate Winslet gave an emotional speech as she collected the trophy for best actress from Nicole Kidman and Shirley MacLaine. She embraced her husband, director Sam Mendes, before going on stage.
Sean Penn collected his second best actor Academy Award. He won the prize for playing slain gay rights pioneer Harvey Milk. As he got on stage, he joked: "You Commie, homo-loving sons of guns."
Slumdog Millionaire director Danny Boyle celebrates with the film's cast after it won eight Oscars, including best film.