Makybe Diva pulled away in the final few furlongs to land the Toohey's New Melbourne Cup for trainer David Hall.
1. Makybe Diva 7-1
2. She's Archie 40-1
3. Jardines Lookout 40-1
4. Pentastic 10-1
Australian jockey Glen Boss hit the front with 200m to go and held off challenges from several horses to win.
She's Archie, ridden by Scott Seamer, finished second, just ahead of another 40-1 shot, the British-trained Jardines Lookout, with Darryll Holland in the saddle.
British-based horses again failed to capture the Melbourne prize, with Godolphin's Millstreet and Mamool finishing at the back of the field.
Frankie Dettori's mount Mamool became the first favourite to finish last since 1934.
"I was going okay but at the 600m mark he dropped his bundle," said the Italian.
Makybe Diva was bred in England but taken to Australia and raced by Croatian-born tuna fisherman Tony Santic.
And the victory completed a remarkable recovery for jockey Boss, who was almost paralysed last year after a heavy fall in Macau that kept him out for four months.
"Once we got to the 1,000 and some of them were starting to make their moves, my smile just got bigger and bigger," said Boss.
"I was all smiles and teeth by the time I got to the 500. She gave me a great ride through the race. I just stayed towards the fence and the runs just kept coming.
"It was just like I was in a zone. Everywhere I went things were happening for me. It was just like it was meant to be."
Millstreet set the early pace in the race, tracked by Zagalia, but as the 23-strong field turned for home, Dean McKeown made his move on Hugs Dancer.
Boss then guided Makybe Diva, priced at 7-1, down the centre of the track, and the six-year-old ran on strongly to give the jockey his first Melbourne Cup success. He was second on Champagne in 1998.
Makybe Diva became only the 14th mare to win Australia's biggest race in 143 years.
Trainer Alan Jarvis was thrilled with Jardines Lookout's effort.
"He's a great finisher," he said. "I know what he can do, I've seen him to do it before so I knew he had got a chance.
"We are delighted, he has run a good race and you can't ask for more than that."
Godolphin trainer Saeed bin Suroor said: "I was disappointed with both horses, we expected better than this.
"I have to check the horses and we'll see if there is anything wrong, if anything happened.
"The horses before the race were sound, happy, healthy and nothing wrong with them. Over the last 600m Mamool didn't look happy.