Christoph Waltz has won the first Oscar of the night, taking the best supporting actor Oscar for his role in Django Unchained.
The 85th Academy Awards kicked off with host Seth MacFarlane introducing the show.
MacFarlane, the man behind hit cartoon Family Guy, said he could not believe he was presenting this year's awards.
"It's an honour that everyone else said no," he said.
He also poked fun at the Academy for not nominating Ben Affleck for his work directing Argo about a CIA scheme to free American hostages in Iran, saying it was "so top secret the film's director is unknown to the academy".
MacFarlane was then joined in a sketch by a videolink featuring William Shatner as Captain Kirk who told him he was "incredibly offensive" and played a clip of him singing a song listing films where star actresses appeared topless.
He was then joined on stage by Charlize Theron and Channing Tatum who danced as he sang Just The Way You Look Tonight.
That was followed by a spoof of Denzel Washington's Flight, about an alcoholic drug addict airline pilot, acted out with sock puppets.
Harry Potter star Daniel Radcliffe then joined Joseph Gordon-Levitt and MacFarlane on stage to sing High Hopes.
Australian Dave Clayton missed out on the visual effects Oscar.
The Oscar went to the team responsible for the visual feast in Ang Lee's film, Life of Pi.
Clayton, a 34-year-old who grew up in the Brisbane suburb of Toowong but has worked out of Peter Jackson's New Zealand visual effects house Weta the past decade, was nominated in the visual effects category for his work on The Hobbit: An Unexpected Journey.
One of Clayton's top jobs was to update the beloved character Gollum, a high-pressure gig considering Gollum was heralded as a huge breakthrough in visual effects when he first appeared in the Lord of the Rings films a decade or so ago.
Clayton was nominated with his Hobbit effects colleagues, Americans Joe Letteri, Eric Saindon and Christopher White.
The other visual effects nominees were the teams from The Avengers, Prometheus and Snow White and the Huntsman.
The 85th Academy Awards are being held at the Dolby Theatre in Hollywood.