The Roman epic, directed by Ridley Scott, won five awards, including best actor for its star Russell Crowe, best visual effects, costume and sound.
And Julia Roberts won the Oscar for her role as feisty single mother Erin Brockovich.
Smiling broadly, she said: "I love the world - I'm so happy. Thankyou - I love it up here."
She added how "amazing the experience of feeling the sisterhood" of the nominees' list was.
Crowe, who played enslaved Roman general Maximus, paid tribute to his late grandfather and uncle who inspired him, but said: "I owe this to one bloke and his name is Ridley Scott."
Martial arts extravaganza Crouching Tiger Hidden Dragon picked up four awards for best foreign language film, music, cinematography and art direction.
Delighted director Ang Lee thanked his friends and family in Taiwan and the people of China, as well as the academy and "enormously talented cast and crew".
And drug-war drama Traffic also won four prizes - best director for Steven Soderbergh, best supporting actor for Benicio Del Toro, best adapted screenplay for Stephen Gaghan and best film editing.
Soderbergh gave a short speech, saying he would thank everyone he wanted to privately, before adding: "I'm going to thank anyone who spends part of their day creating - I don't care if it's a book, a film, a dance, a play - anything - this would be unlivable without art."
Del Toro thanked the Academy and Soderbergh, dedicating his award to "the people of Nogalez, Arizona and Nogalez, Mexico".
Cameron Crowe won the best original screenplay prize for Almost Famous, and told the audience: "The movie was a love-letter to music and to my family so I dedicate this to all musicians who inspire us."
The evening was interspersed with live performances from each of the nominees for best original song, including Sting, Bjork, and Bob Dylan.
The Oscar went to 60s icon Dylan, who appeared to be taken by surprise when his song Things Have Changed from Wonder Boys won.
He described it as a number which "a song which doesn't pussyfoot around or turn a blind eye to human nature".
And producer Dino de Laurentiis, who won Irving G Thalberg Memorial Award, had a message for the studios: "Don't be afraid about young talent - new mind, young mind are to future of tomorrow's films."
Outsider Marcia Gay Harden won best supporting actress for Pollock, about the life of artist Jackson Pollock, and thanked the Academy for even watching the tape.
The ceremony, hosted by comic Steve Martin, opened with a greeting from astronauts on the International Space Station.
Martin, who joked with Julia Roberts about "missing our phone calls", had the audience laughing and clapping within moments of beginning his speech.
He also teased some of the nominees gathered, including Gladiator star Russell Crowe about his love life, although the star did not look entirely amused.
However, the biggest laugh went to his comment: "Hosting the Oscars is like making love to a beautiful woman - it's only something I get to do when Billy Crystal is out of town."
Security was tight, not least because of the potential kidnap threat on Oscar nominee Russell Crowe, which was uncovered recently by the FBI.
But this did not deter the celebrities from flocking to the after-show parties.
Julia Roberts told the BBC that winning the award made her feel "12 years old again", and that when she heard she had won it made her think of "cartwheels".
And two-time Oscar-winner Tom Hanks, who lost out to Crowe, told the BBC: "Russell looked stunned when he won - I was very happy for him and he deserves it very much. I gave him the thumbs up and he returned it," he said.
British actress and former Oscar winner Dame Judi Dench had no problem at not winning this year, and admitted she had not yet seen Gladiator but intended to do so.
"I'm absolutely fine - it's terrific to be nominated - I don't mind in the slightest - I'm just glad to be here," she said.
British singer and songwriter Sting said after the awards: "It was just fun, you know - I didn't expect to win. It's been a pretty good night."