In a ceremony marked by calls to activism across several fronts, gay romance Call Me by Your Name won best adapted screenplay and racial satire Get Out won best original screenplay.
Fantastical romance The Shape of Water won best picture, the film industry's most prestigious honor, its Mexican filmmaker Guillermo del Toro took home the best director Oscar, dashing the hopes of a rare win by a woman or a black filmmaker.
The movie about a mute cleaning woman who falls in love with a strange river creature had gone into the ceremony with a leading 13 nominations, and won a total of four Academy Awards.
A Fantastic Woman, Chile's groundbreaking story about a transgender woman, played by transgender actress Daniela Vega, won best foreign language film, and Mexican-inspired Coco was named best animated feature.
As widely predicted, Gary Oldman won the Oscar for best actor for his role as Sir Winston Churchill in Darkest Hour, while Frances McDormand took the best actress for Three Billboards Outside Ebbing, Missouri, playing Mildred Hayes, an angry woman seeking justice.
Hayes is a divorced mother furious at local police in her small town for not doing more to find the person who raped and murdered her daughter, and puts posters on three huge roadside billboards in a bid to shame them.
It was the second Academy Award for McDormand (60) following her best actress win in 1997 for crime drama Fargo.
"If I may be so honored to have all the female nominees in every category stand with me in this room tonight," McDormand said accepting the award and leading an ovation.
"Look around ladies and gentleman, because we all have stories to tell and projects we need financed," the actress added, capping an awards season marked by women's stories.
McDormand was the front-runner for the Oscar after winning a Golden Globe, Screen Actors Guild Award and numerous film critics prizes for her role.
Oldman (59) was also the front-runner after sweeping awards season with prizes at the Golden Globes, the Screen Actors Guild, and from numerous film critics groups.
"I would just like to salute Winston Churchill, who has been marvelous company on what can be described as an incredible journey," Oldman said while accepting his award.
He also addressed his 98-year-old mother, who he said was watching the ceremony from her sofa. "I say to my mother, thank you for your love and support. Put the kettle on. I'm bringing Oscar home."
Best director Guillermo del Toro (53) is known for making both mainstream action movies like Hellboy and offbeat dark fantasies like Pan's Labyrinth. The Shape of Water has been celebrated as a visual feast.
"The greatest thing art does, our industy does, is to erase the lines in the sand - we should continue doing that - when the world tells us to make them deeper," Del Toro said in accepting the award.
Del Toro was favored to win the directing prize after picking up the Directors Guild of America Award last month. Other Oscar nominees included Christopher Nolan for Dunkirk, Jordan Peele for Get Out, Greta Gerwig for Lady Bird, and Paul Thomas Anderson for Phantom Thread.
The first big awards of the night went to Allison Janney and Sam Rockwell who won best supporting actor Oscars.
Janney, as widely expected, won her first Oscar as the demanding and abusive mother to Olympic figure skater Tonya Harding in the mockumentary I, Tonya.
The seven-time Emmy winner, has swept all major acting honors this season, including Screen Actors Guild, Golden Globe and BAFTA awards.
"I did it all by myself," she said facetiously to laughter from the audience. "Nothing further from the truth."
Janney plays LaVona Golden, the mother of US Olympic figure skater Tonya Harding, in the independent comedy about the disgraced and troubled athlete who is best remembered for her role in a 1994 assault on rival skater Nancy Kerrigan.
She is most familiar to audiences from her roles on 2000's White House television drama The West Wing and current TV comedy Mom. Her past film credits include supporting roles in The Hours and Juno.
Rockwell, the front-runner for the Academy Award, took home the trophy on Sunday (local time) for his role as a racist, dim-witted police officer in Fox Searchlight dark comedy Three Billboards Outside Ebbing, Missouri.
Oscar 'most respected man' in Hollywood
Academy Awards host Jimmy Kimmel wasted no time in confronting the sexual misconduct scandal that has dominated Hollywood.
Opening the show before an A-list audience of scores of actors and filmmakers - many of whom have said they are victims of sexual harassment - Kimmel pulled no punches about the elephant in the room.
Noting that it was the 90th year of the ceremony, Kimmel said the tall golden Oscar statue itself was "the most beloved and respected man in Hollywood."
"He keeps his hands where you can see them, he never says a rude word and most importantly he has no penis at all. He is literally a statue of limitations. That's the kind of man we need more of," Kimmel quipped.
The sexual misconduct scandal has led to dozens of actors, filmmakers and agents being fired or forced to stand down since October 2017, and has overshadowed the movie industry's annual awards season celebrations.
Referring to Fox Searchlight's 13-time Oscar-nominated fantasy romance The Shape of Water, in which a cleaning lady falls in love with a mysterious river creature, Kimmel joked:
"We will always remember this year as the year men screwed up so badly that women started dating fish."
He also turned last year's embarrassing envelope mix-up over the best picture winner into a running joke, warning this year's nominees, "This year when you hear your name called, don't get up right away!"
In some of the strongest moments, rap artist Common and singer Andra Day brought the leaders of activist movements, including #MeToo and Black Lives Matter, onstage for a performance of their Oscar-nominated song Stand Up for Something.
And celebrities ranging from director Ava DuVernay, Salma Hayek and Kumail Nanjiani spoke in a video segment about attempts to smash barriers in the industry around racism, sexism and prejudice against gays and lesbians.
Kenyan-Mexican actress Lupita Nyong'o and Pakistani-American Kumail Nanjiani spoke out on behalf of America's so-called Dreamers - hundreds of thousands of young people whose parents brought them to the United States illegally, and whose fate is now uncertain.
"Dreams are the foundation of Hollywood and dreams are the foundations of America," Nyong'o said.
The sex scandal was also a topic on the red carpet, and the Time's Up campaign against sexual harassment in the wider workplace is expected to be recognised in some form during Sunday's ceremony.
Actress Salma Hayek, one of more than 70 women who have accused disgraced film producer Harvey Weinstein of sexual impropriety, said on the red carpet that she was happy to "celebrate the fact that women will not have to struggle as hard together"
"I know that future generations will have it easier," she told reporters.
Weinstein has denied having nonconsensual sex with anyone.
