The film bested After the Wedding, from
Deepa Mehta's Water had emerged as a strong favourite in the Best Foreign Language Film category, raising hopes of finally breaking the 'Oscars jinx' for Indian filmmakers.
The Lives of Others follows a top Stasi agent, played by Ulrich Muehe, who is assigned to keep tabs on a successful playwright (Sebastian Koch) and his live-in lover, a beautiful actress played by rising German star Martina Gedeck.
In his first full-length feature, director Florian Henckel von Donnersmarck took his inspiration from a quote by Vladimir Lenin that he could not afford to listen to Beethoven because beautiful music might weaken his resolve to destroy any resistance to the Bolshevik revolution.
He said in interviews that this left him with the recurring image of a man who is listening to something but does not hear what he expects and comes away altered by the experience.
And so the spy sits alone, passively but jealously listening in on every intimate detail of the artist couple's relationship.
He starts pulling strings from the shadows, changing the course of their lives but also his own perspective as he starts to realise and doubt what he is doing.
The film, which picked up the European Film Award for best picture, was a box office success in
The impact the Stasi had on people's lives is still a raw wound, and the release of certain files remains the subject of a protracted political debate.
The dreaded secret service had more agents per capita than any other outfit of its kind in the world.
Von Donnersmarck, who was born in
Lead actor Muehe grew up and worked in
And in a case of art and life intersecting, Muehe has repeatedly accused his former wife, Jenny Groellmann, of spying for the Stasi.
Groellmann was one of the most successful actresses in
Their battle received widespread media attention while the film was showing in theaters. Groellmann eventually won a court order forbidding Muehe from calling her a spy.
Meanwhile, the apartment where The Lives of Others was shot has become part of the itinerary of a guided tour of famous film locations in
The country's last win in the category was in 2003, with Nowhere In Africa.