O'Brien kicked off proceedings with a Sabotage-scored sprint through the nominees, dressed as Madigan's character in Weapons, and a plea for what he called "that rarest of qualities today: optimism".
O'Brien, hosting for the second time, alluded to "chaotic and frightening times" in his opening monologue at LA's Dolby Theatre.
But he argued that the current geopolitical climate made the Oscars all the more resonant as a globally unifying force.
Minutes after a faux-Madigan kicked off the broadcast, the real Madigan won best supporting actress for her phenomenally creepy portrayal of Gladys in the horror thriller Weapons.
The 75-year-old actor's win came 40 years after her first Oscar nomination, in 1986 for Twice in a Lifetime.
Letting out a giant laugh as she hit the stage, Madigan exclaimed, "This is great!"
"Gladys has surprised me, she's getting a lot of love back," Madigan said. "I didn't know y'all wanted to hang out with her."
Madigan beat out other nominees Teyana Taylor in One Battle After Another, Wunmi Mosaku in Sinners, and Elle Fanning and Inga Ibsdotter Lilleaas in Sentimental Value.
The Netflix sensation KPop Demon Hunters, 2025's most-watched film, won best animated feature, as expected.
It was a big win for Netflix but a more qualified victory for the movie's producer, Sony Pictures.
Though it developed and produced the film, Sony sold KPop Demon Hunters to the streaming giant instead of giving it a theatrical release.
On Netflix, KPop Demon Hunters became a cultural phenomenon and the streaming platform's biggest hit. It has more than 325 million views and counting.
"This is for Korea and Koreans everywhere," said co-director Maggie Kang.
Earlier, nominees Jessie Buckley and Rose Byrne led the parade of entertainment luminaries arriving for the unusually open best-picture race that pits vampire hit Sinners against the darkly comic thriller One Battle After Another.
Australia's Byrne, who's hoping to win her first Oscar, arrived wearing a strapless black fishtail gown by Dior, with floral embroidery across the bodice and hem.
Security for the ceremony was tight as some of the biggest names in Hollywood walked a red carpet decorated with trees to evoke the feeling of a Zen garden.
Designers said they hoped the scene, which also adorned the stage, would deliver a feeling of calm in a chaotic world.
Organisers said they were working closely with the FBI and Los Angeles police after a federal warning of a possible Iranian threat against California, though authorities have cited no specific or credible danger to the Academy Awards.
The glitzy celebration, Hollywood's most over-the-top gala of the year, takes place as the US wages war on Iran.
This year's awards contest holds an unusually high potential for surprises.
The race for best actor is an especially unpredictable one, pitting Timothee Chalamet against Leonardo DiCaprio and Michael B Jordan.
Chalamet had been considered a frontrunner for his acclaimed performance as a ping-pong hustler in Marty Supreme, but his prospects seemed to dim over an awards-season campaign featuring a streetwear line and a giant blimp and remarks dismissing ballet and opera.
One Battle After Another, starring DiCaprio as a one-time political radical now parenting a teenager, was seen as the frontrunner for best picture after stacking up trophy after trophy at recent ceremonies.
But Sinners, a celebration of blues music and Black culture in the Segregation-era US South starring Jordan, made a late surge with a win this month at the Actor Awards.
Despite almost no campaigning, Sean Penn is viewed as the best supporting actor favourite, with Australia's Jacob Elordi also nominated in the category for his performance in Frankenstein.
Another Australian, Nick Cave, is nominated for the title song to Clint Bentley's film Train Dreams, starring Joel Edgerton.
with Reuters
