Youn Yuh-jung won the best supporting actress Oscar for her role as a cantankerous grandmother in immigrant tale "Minari."
Youn, 73, was the first South Korean actor or actress to win an Oscar in what was shaping up to be a milestone night for people of color, as well as a return to glamour and in-person celebrations after a year of virtual ceremonies.
"Me being here, I cannot believe it," Youn said. She joked about people mispronouncing her name, adding, "Tonight you are all forgiven."
Zhao, 39, won for "Nomadland," about the traveling van community in modern America. She called making the film a "crazy, once-in-a-lifetime journey."
It has been 11 years since Kathryn Bigelow became the first woman to win the director Oscar, for Iraq war drama "The Hurt Locker."
Zhao's win added momentum to an expected best picture win for "Nomadland" later on Sunday. Zhao, who now lives in the United States, recalled growing up in China, where she came to believe that "people at birth are inherently good."
"This is for anyone who has the faith and the courage to hold on to the goodness in themselves ... and in each other," she added.
Britain's Daniel Kaluuya was named best supporting actor for his role as 1960s Black Panther activist Fred Hampton in "Judas and the Black Messiah."
The movie "Soul," the first from Pixar to feature a black lead character, won best animated feature.
Social distancing forced a rethink of the ceremony, moving it to Union Station in downtown Los Angeles.
After strict COVID-19 testing and quarantine protocols, most celebrities were not wearing masks and were shown chatting in an outdoor courtyard ahead of the ceremony, which took place on a nightclub-style set inside the Mission Revival-style train station.
"This was indeed a hard year for everyone, but our love for movies helped to get us through it," said presenter Regina King, who kicked off the ceremony.
"Yes, we are doing it maskless," said King. "Think of this as a movie set, an Oscars movie with a cast of over 200 nominees."
Celebrities were delighted to be back together in the same room.
"It's an amazing party! I was surprised. We haven't had that," Margot Robbie told reporters before the show began.
Denmark's alcoholism dark comedy tale "Another Round" was named the best international feature film. An emotional Thomas Vinterberg dedicated his Oscar to his daughter, who died in a car accident shortly before he started shooting the film.
The #MeToo revenge tale "Promising Young Woman" won an original screenplay trophy for Briton Emerald Fennell. French playwright Florian Zeller won adapted screenplay for "The Father."
The winners are chosen in a secret ballot by the 9,000 members of the Academy of Motion Picture Arts and Sciences.