Ali, 43, is only in the first third of "Moonlight" but his quiet yet powerful performance as Juan has made his presence felt throughout the Barry Jenkin's directed coming- of-age gay drama, even long after his character departs the story.
He was presented the ceremony's first trophy by last year's best supporting actress winner, Alicia Vikander.
"I want to thank my teachers and professors who told me that it is not about you, it is about characters," he said, thanking his wife Amatus Sami-Karim for being supportive while she was expecting their first child, a daughter born just four days ago.
Other nominees in the category were Indian-British actor Dev Patel ("Lion"), Jeff Bridges ("Hell or High Water"), Lucas Hedges ("Manchester by the Sea" and Michael Shannon ("Nocturnal Animals").
Ali's name was recommended to Jenkins by producer Adele Romanski, who had worked with the actor on the Bay Area-set independent drama "Kicks."
The movie's signature image is that of Juan holding the boy in the surf as he teaches him to swim
Ali had revealed that he shaped his performance of a drug trafficker on mentors who left a positive impact on him.
Ali birth name is Mahershalalhashbaz and he converted to Islam in 1999.
The actor has been on a whirlwind awards tour, collecting one trophy after another, including the Screen Actors Guild award for supporting actor.
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