Madonna, in her first live TV performance since a riding accident, launched the show by emerging from a giant disco ball.
"It was amazing to be able to get up and dance," she said afterwards. "You don`t beat singing live."
Coldplay and US band Green Day have won two prizes each at the MTV Europe awards, in a good evening for UK acts.
Robbie Williams, Gorillaz, and James Blunt also won prizes at the ceremony in Lisbon.
Accepting his best male award after performing, Robbie Williams said: "This one`s for my mum."
Accepting their best group prize, Gorillaz co-founder and cartoonist Jamie Hewlett said: "We are the best group and we don`t even exist."
The cartoon band, co-created by Blur`s Damon Albarn, used hologram-style technology to beam three-dimensional performing cartoon characters on stage.
Blunt took the best new act prize.
The ceremony was hosted by Ali G creator Sacha Baron Cohen, playing his Kazakhstani alter ego Borat Sagdiyev.
"Very courageous"
Madonna cavorted with dancers onstage before removing a leather jacket to reveal a purple leotard.
"Being in front of all the people, waiting for it to come up and waiting to see the audience, my heart was just pumping out of my chest," she said.
Afterwards Borat greeted the audience by saying: "Welcome to the 2005 Eurovision Song Contest."
Referring to Madonna, he said: "It was very courageous of MTV to start the show with a genuine transvestite."
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