"This is for anyone who has the faith and the courage to hold onto the goodness in themselves"
The Chinese director had previously made history by becoming the first Asian woman to win Best Director Motion Picture at the Golden Globe Awards.
Now, Zhao has been awarded an Oscar for her 2020 film Nomadland.
Based on the 2017 non-fiction book Nomadland: Surviving America in the Twenty-First Century by Jessica Bruder, Nomadland centres on Fern (Frances McDormand), who travels around America following the death of her husband.
Accepting her award, Zhao reflected on her childhood and inspiration for her work.
“There’s one that I remember so dearly,” she said. “‘People at birth are inherently good,’ and those six [characters] had a great impact [on] me when I was a kid, and I still truly believe them today.”
“Even though sometimes it might seem like the opposite is true, but I have always found goodness in the people I met anywhere I went in the world,” Zhao said at the ceremony in Los Angeles, which was broadcast live in many parts of Asia on Monday morning.
“So this is for anyone who has the faith and the courage to hold onto the goodness in themselves and to hold onto the goodness in each other no matter how difficult it is to do that,” she said.
The only two other Asian directors to win Oscars in the category are Taiwan’s Ang Lee for Brokeback Mountain and South Korea’s Bong Joon-ho for Parasite.
Zhao’s next film is Marvel’s superhero blockbuster Eternals, starring Angelina Jolie, which will be released later this year.