Hollywood finally entrusted a female director with an Oscar on Sunday.
Kathryn Bigelow became the first woman in the 82-year history of the Academy Awards to take the prize as her gritty Iraq War movie The Hurt Locker outshone Avatar after a nail-biting campaign season.
The Hurt Locker also took home the top prize, best picture, and four awards in other categories.
Avatar, the 3D smash directed by Bigelow's ex-husband, James Cameron, ended up with three awards, all in technical categories.
The acting races finished as expected and all four honorees took home the first statuettes of their careers.
Jeff Bridges won for his lead role as a drunken country singer who gets a shot at redemption in Crazy Heart.
Sandra Bullock got the gold for playing a suburban mom who guides a homeless black teen to football stardom in The Blind Side.
In the supporting field, the prizes went to Austrian actor Christoph Waltz for the Nazi revenge fantasy Inglourious Basterds, and stand-up comic Mo'Nique for the dark urban drama Precious: Based on the Novel 'Push' by Sapphire.
The biggest shocks were in the adapted screenplay and foreign-language film categories.
Geoffrey Fletcher became the first African-American to win the writing prize, for his work on Precious.
The prize had been expected to go to Up in the Air, a six-time nominee that was snubbed.
The Argentine crime drama The Secret in their Eyes (El secreto de sus ojos) beat Germany's The White Ribbon (Das weisse Band) and France's A Prophet (Un prophete) to claim the country's second prize in the field.
In voting for The Hurt Locker, Hollywood insiders clearly showed a preference for a relatively obscure movie that suffered a similar commercial fate as other films revolving around the Iraq War.
With North American ticket sales of about USD 15 million -- about half of what Avatar earned in its first day -- The Hurt Locker is one of the least-commercial best-picture Oscar winners ever.
The film, based on a story by journalist Mark Boal, follows an American bomb-disposal squad in Iraq. Boal won an Oscar for his original screenplay, and was also a producer, along with Bigelow, Greg Shapiro and French financier Nicolas Chartier.
The best-picture win was a bittersweet moment for Chartier, who was banned from the ceremony last week after breaking Oscar campaign rules by sending out an e-mail to voters.
Bigelow, 58, shot the film in the Jordanian desert in the middle of summer almost three years ago on a shoestring budget of USD 15 million. It marked her first movie since the costly 2002 submarine flop K19: The Widowmaker.
Only three other women had ever been nominated for the directing Oscar, most recently Sofia Coppola for Lost in Translation in 2004.
As Bigelow left the stage clutching her statuette, the orchestra played Helen Reddy's feminist anthem I Am Woman. But the shy horse-lover has bristled at the "female filmmaker" tag, and her works are often showcases for strong male roles.
Even Cameron had predicted he would lose the directing race to Bigelow, with whom he has remained on good terms after the couple split in the early 1990s. But he had hoped to repeat the the best-picture success he had 12 years ago with Titanic.
The race for the top Oscar thus pitted two ex-lovers against each other, with each claiming their film was the underdog: The Hurt Locker for obvious commercial reasons, and Avatar because sentiment largely seemed stacked against it.
Even though Avatar has made history with $2.6 billion in worldwide ticket sales and showcased Cameron's bold moviemaking skills, Oscar voters traditionally ignore science-fiction.
Avatar also lost some major races to The Hurt Locker.
Another new consideration this time saw organizers double the best picture field to 10 for the first time since 1943. The move was designed to bring more crowd-pleasing blockbusters and thereby arrest the event's steadily declining ratings.
The voting rules accordingly changed for best picture, with a preferential system that favored consensus choices over more-divisive contenders.
All the acting winners were first-time nominees, except for Bridges. The 60-year-old scion of a Hollywood acting family had been nominated four times previously, dating back to 1972. Crazy Heart also won the Oscar for best song.
Bullock, 45, ran a close race with Meryl Streep for Julie & Julia. It's now been 27 years since 16-time nominee Streep won her second Oscar.
Waltz, 53, who played a Nazi with a twinkle in his eye, becomes the first actor to win an Oscar for a film directed by Quentin Tarantino.
Mo'Nique's role as a abusive mother was a departure for the 42-year-old comedienne. But she has said she got into character after recalling the sexual abuse she suffered as a youngster.
The three-and-a-half-hour ceremony, hosted at the Kodak Theatre by Alec Baldwin and Steve Martin, drew real-time brickbats from bloggers.
Film critic Roger Ebert wrote, "I don't remember when I've seen a less exciting Oscarcast."