Winner Alexander Rybak, 23, received 387 points for his self-written folk song 'Fairy Tale', clinching his country's third victory in the contest.
Speaking after the result was announced, he commented: "It's simply wonderful. Thank you. You're the best audience in the world!"
Iceland, represented by 18-year-old Yohanna, were runners-up with 218 points. Azerbaijan's AySel & Arash and Turkey's Hadise followed in third and fourth place respectively.
The UK's Jade Ewen, 21, secured fifth position and 173 points with 'It's My Time', composed by theatre legend Andrew Lloyd-Webber. It was Britain's best result in seven years.
In 2008, UK entrant Andy Abraham finished joint last in the contest, prompting veteran Eurovision commentator Sir Terry Wogan to quit. He was replaced by TV host Graham Norton.
This year's competition saw the introduction of a change in the voting system. As well as telephone votes from Europe, panels of music experts in each country also helped to determine the final result.