The 12-1 chance Al Boum Photo, ridden by Paul Townend, put in a superb display to give trainer Willie Mullins a first Cheltenham Gold Cup victory.
Mullins, the Festival's most successful trainer, had previously finished second six times in the prestigious race.
Al Boum Photo had some anxious moments with his jumping but raced away to win by two-and-a-half lengths.
Fellow Irish challenger Anibale Fly (22-1) was second with the grey Bristol De Mai (18-1) back in third.
"I can't believe it," an emotional Townend told BBC Radio 5 Live. "It means everything. It's the pinnacle and I can't believe I've won it.
"I got in a beautiful rhythm. When you're going well, it just seems so simple."
But there was mixed emotions for Mullins after one of his three other runners, Invitation Only, suffered a fatal injury following a fall during the race.
It was the second horse lost by Mullins at the Festival after Ballyward on day one and came after the Joseph O'Brien-trained Sir Erec broke down during the day's opening race.
- Al Boum Photo provides Mullins with missing big picture
- Ballyward dies during National Hunt Chase
- Sir Erec suffers fatal injury
- Cheltenham Festival podcast
For a long time it looked like last year's winner Native River and runner-up Might Bite would be in the shake-up again as they headed the field after the first circuit.
Clan Des Obeaux, part-owned by former Manchester United manager Sir Alex Ferguson, looked like he would challenge.
But it was Al Boum Photo, the only one of the four Mullins runners to make it to the second circuit, who started to look the strongest.
The pair had a slight wobble at the second last before safely negotiating the final fence and battling up the famous Cheltenham hill for the victory.
Native River was fourth, with the 100-30 favourite Presenting Percy in eighth.
"I've got used to the disappointment of finishing second and I sort of resigned myself to never winning a Gold Cup," said Mullins, whose late father Paddy trained Dawn Run to victory in the 1986 race.
"To have three of my four runners out of the race before they came to the second last first time round - I was depending on one.
"Every time I looked at Paul, his body language told me he was very happy and the horse was relaxed.
"When he came over the last, I just looked at the winning post and thought nothing would come and get him unless he stops or runs out or something like that.
Townend and Al Boum Photo had been at the centre of a dramatic incident at last year's Punchestown Festival that left the jockey with a 21-day ban for dangerous riding.
Townend, while leading the Champion Novices' Chase, steered the horse right of the final obstacle having apparently heard a shout telling him to bypass it.
In the process he collided with fellow runner Finian's Oscar and crashed into the white fence.
BBC horse racing correspondent Cornelius Lysaght
This was the deserved plugging of a major gap in Willie Mullins' CV.
For one of the sport's most prominent figures, from a highly successful racing dynasty, to have just missed out on Gold Cup glory quite so many times was as extraordinary as it must have been heart-wrenching.
The seven-year-old Al Boum Photo always seemed to be moving well and once over the last fence, the thought of all those runners-up galloped through our heads, but, 20 years after Florida Pearl became his first contender, this was to be Mullins' day at last.
Of the big players, Presenting Percy's jumping wasn't great; Clan Des Obeaux's stamina didn't appear to last out; and last year's winner Native River wasn't able to dominate as much as he likes.
Blackmore claims Grade One honours
The final day of the Festival saw Irish jockey Rachael Blackmore emulate Bryony Frost's achievement on Frodon in Thursday's Ryanair Chase as she won a Grade One race when Minella Indo took the Albert Bartlett Novices' Hurdle at 50-1.
The win for the Henry de Bromhead-trained maiden was Blackmore's second success of the week.
Nico de Boinville earned the leading rider award thanks to Pentland Hill taking the Triumph Hurdle at 20-1 - his third win of the week - while trainer Dan Skelton celebrated a second successive County Hurdle when Ch'tibello (12-1) took the honours.
Last year's winner was Mohaayed, ridden by Skelton's brother Harry's fiancee, Bridget Andrews, but this time Harry was the winning jockey.
Hazel Hill (7-2 fav) came with a well-timed run under Alex Edwards to take the Foxhunter Chase for amateur riders while Kielan Woods earned a first Festival win as the 66-1 chance Croco Bay took the Grand Annual Chase.
And after suffering heartbreak earlier with Sir Erec, Joseph O'Brien finished the meeting with a winner through Early Doors (5-1) in the Martin Pipe Conditional Jockeys' Hurdle.
The horse was ridden by Jonjo O'Neill Jnr, son of the trainer and former champion jockey, who rode Dawn Run to victory for Paddy Mullins 33 years ago.