Larson, 26, was favourite in the highly competitive category despite critically-applauded performances by previous Oscar-winners Cate Blanchett (Carol) and Jennifer Lawrence (Joy). The other nominees in the category were Charlotte Rampling for "45 Years" and Saoirse Ronan in "Brooklyn".
Larson's portrayal of a woman, who constantly struggles to shield her five-year-old child from reality while battling her the bleakness of her captive years in a garden shade, has received widespread praise from critics.
Larson hugged Jacob Tremblay, her young co-star of the movie, before heading to the stage.
"Thank you Academy. I want to start big because the thing I love about movies is how many people it takes to make it," Larson said.
Such was the buzz around Larson's performance that fellow best actress nominee Lawrence had rightly predicted "I think this is Brie Larson's year, it should be."
Larson had already won the Golden Globe, Critics Choice, SAG and BAFTA awards, making her a sure short winner in the category.
The film is directed by Lenny Abrahamson and written by Emma Donoghue, based on her novel of the same name. She conceived the story after hearing about five-year-old Felix in the infamous Fritzl case.
Larson has been in the industry from last two decades since she was a child but her part in "Room" has catapulted to fame and the Oscar is likely to give her career further boost.
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