It was the second time a movie by sibling filmmakers Jean-Pierre and Luc Dardenne won the prestigious Palme d'Or. Their teen drama "Rosetta" took the main Cannes prize six years ago.
The award was presented by Hilary Swank and Morgan Freeman, who won Academy Awards in February for Clint Eastwood's boxing saga "Million Dollar Baby."
Receiving the second-place grand prize was U.S. director Jim Jarmusch's "Broken Flowers," a droll drama starring Bill Murray as an aging Don Juan in pursuit of the son he never knew he had.
Tommy Lee Jones was honored as best actor for "The Three Burials of Melquiades Estrada," his feature-film directing debut in which he plays a Texas ranch hand who forces his best friend's killer (Barry Pepper) to dig up the body and haul it for reburial in Mexico. The film also won the screenplay award for Mexican writer Guillermo Arriaga.
Hanna Laslo earned the best-actress prize for her role as a gabby cabdriver in Israeli director Amos Gitai's "Free Zone," a road-trip tale through the Middle East.
Austrian filmmaker Michael Haneke received the directing award for "Hidden," his cryptic thriller about a couple menaced by a video stalker.
The third-place jury prize was given to Chinese director Wang Xiaoshuai's "Shanghai Dreams," a love story set among workers who dutifully obeyed the government's call to relocate to factories in a remote new territory in the 1960s.