Last year's runner-up Fiorente hung back early but staged a thrilling duel with Red Cadeaux before gaining the upper hand with 100 metres of the race to go.
Red Cadeaux finished second, with Mount Athos coming in third.
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Fiorente beat Red Cadeaux by three quarters of a length with another one-and-a-half lengths to Mount Athos.
Ruscello, who was leading when the field passed the winning post for the first time, finished last, whilst French mare Verema failed to complete the course.
The victory marks the end to a controversial year for Fiorente trainer Gai Waterhouse after a well-publicised public stoush with fellow racing identity John Singleton.
The triumph gives Waterhouse her first Melbourne Cup win after coming agonisingly close in previous races.
The victory in front of 100-thousand racegoers at Flemington also sealed Waterhouse's standing as one of Australia's greatest horse trainers.
Speaking with Channel Seven, Waterhouse praised her jockey Damien Oliver after his strong ride to victory.
"Oh didn't he ride him a treat, honestly and truly! He got back to about 12th and it was quite a solidly run race and then he just kept trekking up and trekking up and it was just fantastic. It was a dream come true. I'm so thrilled for all the owners. I'm so thrilled for all the people that come to me every day and say good luck Gai. They're the people I'm so thrilled for. I'm just so thrilled for everyone."
The win delivers Damien Oliver his third Melbourne Cup.
It comes two months after he returned to racing after serving a ban for betting on a rival horse in a race he was riding in in 2010.
The 41-year-old told Channel Seven the triumph is overwhelming.
"Yeah it's amazing. It's a dream come true. There are a lot of emotions going through my body right now. It's really hard to believe. It's just amazing. I'm so rapt that I could be a part of Gai's first one. She's done so much for racing and it's a great honour for me to help bring home her first one."
2013 had been considered a strong field that included several past winners and runners-up.
Nine overseas-trained horses took part in the race, signalling the shift of the Melbourne Cup from an Australian event to an international one.
Only five horses racing in the Cup were bred in Australia, with Fawkner the best of the domestic stock.
The chances of Gai Waterhouse claiming a win were made all the more possible by the absence from the field of any horses trained by another giant of Australian racing, Bart Cummings.
Waterhouse says she's now set her sights on equalling the two Melbourne Cups won by her trainer father, TJ Smith.
"Gai, what about the fact that you've done what T.J. was able to do twice? What does that mean to you today?"
"Well, I've got to do it again, haven't I?!"
