Director Paolo Sorrentino's film about an aging writer's reflections on life and his search for meaning among Rome's idle rich also won top foreign film honors at the Golden Globes and Britain's BAFTAs.
It was the first Oscar for Sorrentino and the 11th win for an Italian film since foreign language film became a competitive category in 1956, the most of any country. Italian films earned three additional Academy Awards before that time.
In his acceptance speech, Naples-born Sorrentino gave a nod to Italian director Federico Fellini, former Argentine soccer player Diego Maradona - who once played for Naples soccer club - his wife and the central focus of his film, Rome.
"Thank you to my inspiration, Federico Fellini ... Martin Scorsese, Diego Armando Maradona," he said, "and thank you to Roma, Napoli ... and this is for my parents."
"The Great Beauty" (La Grande Bellezza) - which follows 65-year-old writer Jep Gambardella, played by Toni Servillo, through all-night parties and high-class affairs - has reminded critics of Fellini's "La Dolce Vita" in its portrayal of the Italian capital's hedonistic haut monde.
Jep's existential conundrum unleashes a series of reflections about his provincial youth, unrequited love and a soulless Catholic Church unable to satisfy his search for a meaning in life.
Sorrentino said ahead of the Oscars that in the film he wanted to contrast the visual beauty of Rome with the "people who don't realize that this beauty is all around them."