Confirming Haneke's status as arguably the most important film director working in Europe, the jury headed by Italian director Nanni Moretti crowned his latest film above 21 others racing for Cannes Film Festival's top award.
Haneke's octogenarian actors, French screen icon Jean-Louis Trintignant, 81, and Emmanuelle Riva, 85, bowled Cannes over in the story of Georges and Anne, an adoring couple whose bond is tested after she suffers a stroke.
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Hailed as a "masterpiece" by critics, and the hands-down favourite to win, the French-language "Amour" marked a journey into tender new territory for a director better known for exposing the icy secrets of the soul.
The director's sober camera chronicles the intimacy of Anne's physical and mental decline, the crushing efforts required of ageing Georges to help her stand, wash or eat, fulfilling a pledge to care for her at home until the end.
Both actors climbed on stage at the star-studded gala in the Riviera city to accept the award with Haneke, who dedicated it to his wife of 30 years.
"This film is an illustration of the promise we made to each other, if either one of us finds ourselves in the situation that is described in the film," the 70-year-old director told the audience.
Speaking for the rest of the jury, the designer Jean-Paul Gaultier said Riva and Trintignant had delivered "the greatest emotion of all the movies we saw."
"I must say that I cried a lot, I was choking. But I love to be hurt in that way. It was fabulous, very poetic and absolutely admirable."
Haneke took the Palme d'Or three years ago for a very different work, "The White Ribbon" a black-and-white study of malice in a German village on the eve of World War I, which some saw as a parable on the roots of Nazi savagery.
He now joins a highly select club of two-time laureates, including US director Francis Ford Coppola, Denmark's Bille August, Serbia's Emir Kusturica, Japan's Shohei Imamura and the Belgian brothers Jean-Pierre and Luc Dardenne.
Cannes' best actor award went to Danish heart-throb Mads Mikkelsen, searing as a man falsely accused of molesting a child in the psychological thriller "The Hunt" by Thomas Vinterberg.
Mikkelsen, 46, is best known to international audiences for his role as James Bond's nemesis Le Chiffre in 2006's "Casino Royale".
Two young Romanians, Cosmina Stratan and Cristina Flutur, shared the best actress prize for their roles in Cristian Mungiu's "Beyond the Hills", about a young nun and her friend who falls victim to a deadly "exorcism".
Mungiu, who captured the Palme d'Or in 2007 for the Communist-era abortion drama "4 Years, 3 Months and 2 Days", also won this year's screenplay prize for the story that explores how badly institutions can fail the individual.
"My concern was to talk about something that matters. There are so many films today that are only concerned with entertaining," Mungiu told AFP-TV as he left the awards ceremony.
Mexican Carlos Reygadas took best director prize for the puzzling family drama "Post Tenebras Lux", whose Latin title means "after darkness, light" and derives from the biblical Book of Job.
"I thank the jury, made up of free men and women," the director said.
The Cannes jury said the film -- which baffled festival-goers -- had divided them as well, but its defenders won out in the end.
"It is full of the fragility of life, the vulnerability of life, full of tenderness," said British film-maker and juror Andrea Arnold, while Haitian director Raoul Peck said he had "rarely seen such powerful images".
The festival's runner-up Grand Prix award went to "Reality", a tragicomedy by Italy's Matteo Garrone starring a jailed former mafia hitman as a man driven mad by a quest to become a reality TV star.
Neapolitan Aniello Arena got his lucky break in a prison theatre company and was given permission to act in the film on a day-release programme, but not to join the cast and crew on the Riviera.
Cannes veteran Ken Loach took the third place Jury Prize for his bittersweet comedy "The Angel's Share", about a young offender who discovers a life-changing talent for whisky-tasting.
The 75-year-old, who took the Palme in 2006 for "The Wind That Shakes the Barley" about Ireland's independence struggle, was comp[eting in Cannes this year for a record 11th time.
"Cannes shows us that cinema is not just a diversion, but it shows us who we are and how we live together," said the director.
