The actor beat Jeff Bridges (Hell or High Water), Lucas Hedges (Manchester By the Sea), Dev Patel (Lion) and Michael Shannon (Nocturnal Animals).
The film stars Ali alongside Trevante Rhodes, André Holland, Janelle Monáe, Ashton Sanders, Naomie Harris.
“I want to thank my teachers ... I have so many wonderful teachers,” he says while receiving the award.
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Ali has won several other awards for his role as Juan in "Moonlight." He won a Screen Actors Guild, Critics Choice and NAACP Image awards.
"Moonlight" is a 2016 American drama film directed by Barry Jenkins, based on the play "In Moonlight Black Boys Look Blue."
The film received eight Oscar nominations for the 89th Academy Awards, including Best Picture, Best Director, and Best Adapted Screenplay.
Mahershala Ali is the first muslim to win an Oscar.