Early favourites in all four acting categories saw their names come up during the nomination announcement.
Britain's Helen Mirren was nominated for her role as Elizabeth II in The Queen as was Forest Whitaker for playing Ugandan dictator Idi Amin in The Last King of Scotland.
Eddie Murphy and Jennifer Hudson were put forward for their roles as soul singers in Dreamgirls.
It was the first Oscar nomination for Murphy in his vastly successful 25-year career. For Hudson, the nomination caps a speedy rise to stardom with her first film role, just two years after making her name as a finalist on the hit TV singing competition American Idol.
Eighth time lucky?
The best-actress category featured a 14th nomination for two-time winner Meryl Streep - the most-nominated actor ever - this time as a demanding boss in The Devil Wears Prada.
Joining Mirren and Streep as best-actress nominees were Spain's Penelope Cruz as a woman dealing with bizarre domestic crises in Volver, Judi Dench as a scheming teacher in Notes on a Scandal, and Kate Winslet as a woman in an affair with a neighbour in Little Children.
Other best-actor nominees were Leonardo DiCaprio as a mercenary hunting a rare gem in Blood Diamond and the veteran Peter O'Toole as a lecherous old actor in Venus.
Whitaker is expected to come away with the best actor award, though sentiment is high for the Irish-born O'Toole, who has yet to win after being nominated seven times before.
An eighth loss would put O’Toole in the record books as the actor with the most nominations without winning.
This finally may also finally be the year for another perennial loser, Martin Scorsese, nominated for The Departed, who is tied with four other directors for the dubious record of five nominations and five losses.
The 79th Academy Awards will be held in Los Angeles on February 25.
And the Oscar could go to…
Best Picture: Babel, The Departed, Letters From Iwo Jima, Little Miss Sunshine, The Queen.
Best actor: Leonardo DiCaprio for Blood Diamond, Ryan Gosling for Half Nelson, Peter O'Toole for Venus, Will Smith for The Pursuit of Happyness, Forest Whitaker for The Last King of Scotland.
Best director: Alejandro Gonzalez Inarritu for Babel, Martin Scorsese for The Departed, Clint Eastwood for Letters From Iwo Jima, Stephen Frears for The Queen, Paul Greengrass for United 93.
Best actress: Penelope Cruz for Volver, Judi Dench for Notes on a Scandal, Helen Mirren for The Queen, Meryl Streep for The Devil Wears Prada, Kate Winslet for Little Children.
Supporting Actor: Alan Arkin for Little Miss Sunshine, Jackie Earle Haley for Little Children, Djimon Hounsou for Blood Diamond, Eddie Murphy for Dreamgirls, Mark Wahlberg for The Departed.
Supporting Actress: Adriana Barraza for Babel, Cate Blanchett for Notes on a Scandal, Abigail Breslin for Little Miss Sunshine, Jennifer Hudson for Dreamgirls, Rinko Kikuchi for Babel.
Foreign Language Film: After the Wedding (Denmark), Days of Glory [Indigenes] (Algeria), The Lives of Others (Germany) Pan's Labyrinth (Mexico), Water (Canada).