It was the second Academy Award for McDormand, 60, following her best actress win in 1997 for crime drama "Fargo."
"If I may be so honored to have all the female nominees in every category stand with me in this room tonight," McDormand said accepting the award and leading an ovation.
"Look around ladies and gentleman, because we all have stories to tell and projects we need financed," the actress added, capping an awards season marked by women's stories.
McDormand was the front-runner for the Oscar after winning a Golden Globe, Screen Actors Guild Award and numerous film critics prizes for her role.
"Three Billboards" director and writer Martin McDonagh has said he wrote the role of Mildred Hayes expressly for McDormand.
Hayes is a divorced mother furious at the local police in her small town for not doing more to find the person who raped and murdered her daughter, and puts posters on three huge roadside billboards in a bid to shame them.
The publicity-averse McDormand is married to independent movie director Joel Coen and is one of the most respected actresses in Hollywood. Sharp-witted and direct, she shuns plastic surgery, the trappings of fame and the glitz of Hollywood's awards season.
McDormand is also a stage and television veteran. She won an Emmy for her work on the 2014 TV series "Olive Kitteridge" and a Tony for her role in the 2011 play "Good People."
Her other movies include "Moonrise Kingdom," "North Country" and "Mississippi Burning."
(Reporting by Jill Serjeant; Editing by Sandra Maler and Peter Cooney)