Russian director Alexander Sokurov's take on the German legend Faust has won the film a Golden Lion - the top award at the Venice Film Festival.
The classic tale explores the corrupting nature of power as scholar Faust sells his soul to the devil.
German-born Irish actor Michael Fassbender was named best actor for playing a sex addict in British director Steve McQueen's Shame.
The best actress award went to Hong Kong's Deanie Yip in A Simple Life.
Fassbender, 34, previously worked with McQueen in the filmmaker's Bafta-winning debut feature Hunger, playing jailed IRA hunger striker Bobby Sands.
Accepting his acting honour, he said: "It's just really nice when you take chance and you do something that you think is relevant - you hope is relevant - and people respond the way they did."
Fassbender also starred in another Venice competition film - David Cronenberg's A Dangerous Method - in which he plays psychoanalyst Carl Jung.
The film will show at the London Film Festival next month.
Golden Lion winner Faust was praised by US director Darren Aronofsky - head of the Venice jury - who presented the award.
He said: "There are some films that make you cry, there are some films that make you laugh, there are some films that change you forever after you see them; and this is one of them."
At a news conference following the award ceremony, Sokurov appealed for governments to continue funding the arts.
"Culture is not a luxury! It is the basis for the development of the society," he said.