Kauto Star out-jumped his rivals superbly to claim his second win in the King George VI Chase at Kempton.
Kauto Star jumped strongly around the Kempton course
Last year's Gold Cup winner, with Ruby Walsh back in the saddle after injury, looked impressive throughout to claim a comfortable success by 11 lengths.
The 4-6 favourite moved up a gear to challenge Exotic Dancer and Racing Demon in the back straight.
From then on there was only one horse in it as he safely negotiated the rest of the fences to take victory.
Walsh said: "It was a bit special. He's a fabulous horse. There wouldn't be a better horse of my generation.
"He always hangs a bit left. That's why he's a better horse going in the other direction.
"He stays so well, but I had such a good feeling when I had the others stone cold at the fourth-last. That speaks for itself."
Winning trainer Nicholls added: "Ruby told me if he'd ridden a winner on his first day back from injury the other day, he'd have ridden him with more confidence. It's good to have him back.
"Earlier in the season it took Kauto Star time to come to himself. We didn't want to have him at his best earlier in the season. It's a long old time. He's progressed with runs and he was as good today as he's ever been.
"I'm so pleased for the horse. He's been knocked a bit and today he showed how good he is."
Earlier, Tony McCoy on Straw Bear got the better of Paul Carberry and Harchibald to win the Grade One Christmas Hurdle.
Harchibald was kept off the pace early on with Straw Bear towards the head of affairs but Carberry brought his charge into contention and the pair jumped the second-last together.
Despite Harchibald going half a length up, Straw Bear found another gear late on to get ahead in the final couple of strides for victory by a head.
Meanwhile, Lothian Falcon gave trainer Peter Maddison a late Christmas present with success in the Rowland Meyrick Handicap Chase at Wetherby.
The 2-1 favourite, the mount of Robert Walford, gradually worked his way into the race and was travelling well before the field turned for home for the final time.
Lothian Falcon got a decisive lead with a strong jump at the fourth-last and kept on well before recording a six-length win.
Last year's winner Leading Man (6-1) plugged on to claim second, with Flying Enterprise a further neck away in third.
King George VI Chase (Kempton)
1. Kauto Star (R Walsh) 4-6 Fav
2. Our Vic (T J Murphy) 12-1
3. Exotic Dancer (A P McCoy) 9-2
Christmas Hurdle (Kempton)
1. Straw Bear (A P McCoy) 9-2
2. Harchibald (P Carberry) 8-11 Fav
3. Penzance (R Thornton) 20-1
Rowland Meyrick Handicap Chase (Wetherby)
1. Lothian Falcon (R Walford) 2-1 Fav
2. Leading Man (K Mercer) 6-1
3. Flying Enterprise (A O'Keeffe) 4-1