The filmmaker also wrote, produced and edited the movie, which has won dozens of awards since it premiered at the Venice Film Festival last year. Chloé also picked up a Best Director Golden Globe and BAFTA for her work on the film, and also won a Critics' Choice Award. Nomadland was also named Best Film at this year's BAFTAs, and its star, Frances McDormand, took home the Best Actress prize at the BAFTAs, too.
As Chloé accepted her Oscar, she told the audience at Los Angeles' Union Station that she will always remember a phrase from a poem she learned with her father when she was growing up in China: "People at birth are inherently good."
"Those six letters had such a big impact on me," she said, "and I still truly believe them even if it might seem the opposite.
"This is for anyone who has the faith and courage to hold onto the goodness in themselves and in each other. This is for you; you inspire me to keep going."
Chloé was presented with the award by Bong Joon-ho, who won it last year for his Parasite. He joined the Oscars telecast from Seoul.
Later in the evening, Nomadland was also named Best Picture, and Frances took home the Best Actress award.
Until now, only five women have ever been nominated for the Best Director Oscar: Greta Gerwig (Lady Bird, 2017), Kathryn Bigelow (The Hurt Locker, 2009), Sofia Coppola (Lost in Translation, 2003), Jane Campion (The Piano, 1993) and Lina Wertmüller (Seven Beauties, 1976). Kathryn was, until this year, the only woman to win the prize.