Joker, a daring take on the comic book villain starring Joaquin Phoenix, won the Golden Lion for best film, with Roman Polanski controversially taking home second prize.
The film had received an eight-minute standing ovation at its premiere in the Italian city.
It is the first superhero film ever to get this kind of arthouse kudos, and could now be on its way to Oscar glory.
The last two Venice winners – Roma and The Shape of Water – have gone on to lift the best picture Academy Award.
Meanwhile, there were audible gasps when French-Polish director Polanski was handed second prize for his drama, An Officer and a Spy.
The film has received positive reviews but also controversy regarding Polanski, who was convicted of the statutory rape of a 13-year-old girl in 1978, and has faced other allegations of sexual assault.
The move to include Polanski in this year’s festival sparked widespread outcry and controversy.
Festival organisers defended the decision, saying it was only the film and not Polanski that was being judged at the event.
Polanski’s wife Emmanuelle Seigner, who stars in the film, received the award on his behalf.