Rags-to-riches romance "Slumdog Millionaire" scooped up eight Oscars, including best film, at the 81st Academy Awards ceremony in Hollywood on Sunday.
Briton Danny Boyle was named best director for the often dark but ultimately hopeful tale about a poor Indian boy who competes for love and money on a television game show, while writer Simon Beaufoy won best adapted screenplay.
"You've been been so generous to us this evening, and I want to thank you for that," Boyle said to the audience when accepting his Oscar. He also thanked his family, the film's makers, and the entire city of Mumbai, where Slumdog was shot.
The film also earned Oscars for best cinematography, sound mixing, film editing, original score for composer A R Rahman and best song, Jai Ho for Rahman and lyricist Gulzar.
Kate Winslet was named best actress for her dramatic turn as a former Nazi prison guard who involves herself in a love affair with a teenage boy in The Reader.
The 33-year-old fought back tears when accepting her trophy and remembered a time as an eight-year-old when she dreamed of winning one of the world's top film award.
Winslet had been nominated for an Academy Award five times in the past 13 years years but had always returned home empty-handed.
Her best actress Oscar joins two Golden Globes, a Screen Actors Guild award, a British BAFTA and a handful of US critics awards that Winslet has won this season.
Among those Winslet thanked on Sunday was New Zealander Peter Jackson who directed her in Heavenly Creatures, one of her first major film roles.
Sean Penn earned his second Oscar for best actor, portraying slain gay rights activist Harvey Milk in Milk.
"You commie, homo-loving, sons of guns," the sharp-tongued Penn, 48, told the audience as he collected his award. "I did not expect this and ... I know how hard I make it to appreciate me."
The straight actor's portrayal of an openly gay politician was a timely one - with Milk coming out shortly after California's same-sex couples lost their right to marry in a voter referendum.
Penn first won an Oscar in 2004 for his lead role as a grieving father in Mystic River.
Cruz, Ledger win best supporting Oscars
Early honors went to Penelope Cruz, who became the first Spanish actress to win an Academy Award for her supporting role in Vicky Cristina Barcelona.
Her win on Sunday follows a British BAFTA award and other US critics awards this season for her performance as the fiery ex-wife to a bohemian artist who woos a pair of young American women on holiday in Spain.
Australian Heath Ledger was posthumously named best supporting actor for his villainous role as The Joker in Batman movie The Dark Knight.
His family received the award for best supporting actor on behalf of Ledger, who died of an accidental overdose in New York in January last year.
Ledger becomes the second performer to win a posthumous Oscar, following Peter Finch's win for Network in 1977.
In the night's one big surprise, Japanese movie Departures beat the favorite, Israeli film Waltz With Bashir for foreign language film.
The new-look awards extravaganza had got off to a flying start with host Australian actor Hugh Jackman wasting no time in launching into a medley of musical numbers that referenced this year's nominees.
It was one of several innovations made by Oscars show producers that breathed new life into the previously tried and trusted formula which had led to record low television ratings last year.