Day-Lewis had been odds-on favourite to win the prize |
The star, who has joint British-Irish citizenship, collected his award from Dame Helen Mirren, and joked about her performance in her film The Queen.
"This is the closest I'll ever come to getting a knighthood," he said.
Tilda Swinton was the UK's other big winner, taking best supporting actress for her role in Michael Clayton.
But it was the Coen Brothers' No Country For Old Men that won the night's main prizes - best film and best director.
No Country For Old Men
Daniel Day-Lewis
Marion Cotillard
Javier Bardem
Tilda Swinton
The dark comedy, about a hitman who stumbles across the gory aftermath of a drugs deal, also picked up best adapted screenplay and best supporting actor for Javier Bardem.
France's Marion Cotillard was rewarded for her interpretation of Edith Piaf in La Vie En Rose with a best actress Oscar.
Exotic dancer-turned-screenwriter Diablo Cody won the best original screenplay award for her quirky, verbose comedy Juno - her first script.
Meanwhile Irish singer Glen Hansard and his girlfriend Marketa Irglova took the best original song for Falling Slowly, culled from the low-budget musical Once.
'Rubber batsuit'
Swinton, who plays a corporate lawyer attempting to cover up a scandal in Michael Clayton, dedicated her Oscar statuette to one of her representatives in the US.
"I have an American agent who is the spitting image of this," she said.
"Really, truly. The same shape head and, it has to be said, the buttocks."
She also poked fun at her Michael Clayton co-star George Clooney, by referring back to his critically-derided stint as superhero Batman.
"Seeing you climb into that rubber batsuit from Batman and Robin, the one with the nipples, every morning under your costume, on the set, off the set, hanging upside-down at lunch... You rock, man."
Day-Lewis's Oscar is his second, having previously won for My Left Foot in 1990.
The 50-year-old was also nominated in 1994 for In the Name of the Father and in 2003 for Gangs of New York.
The star is famed for immersing himself in his characters and for shunning Hollywood during long periods between roles.
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