The science fiction fantasy was named best drama and the filmmaker was honored as best director. The honors from the Hollywood Foreign Press Association are considered the start of the award season in Hollywood.
Avatar is set on a fictional planet called Pandora, a distant four light years from Earth. The film blends cutting edge 3D technology with a sci-fi fantasy theme.
Avatar was released just one month ago, and is already the number two grossing film of all time. Cameron's romantic disaster film Titanic, released in 1997, remains number one.
An exuberant Cameron told his fellow Hollywood filmmakers, actors and actresses, that they have the greatest jobs in the world.
Accepting the award for best director, he talked about the collaborative nature of his film.
"I'm very grateful to the Hollywood Foreign Press Association, especially on behalf of all the artists that it took to make this film, to create this world, every blade of grass and every creature in it," he said.
He says the artists who brought the fictional world to life range from designers and computer specialists to actors.
The Las Vegas farce Hangover was named best comedy or musical.
Sandra Bullock was honored for her starring role in the sports drama The Blind Side.
In the film, she plays a mother who helps a troubled high school football star.
(Bullock) "Big Mike. Why were you going to the gym?"
(Big Mike character) "Because it's warm."
(Bullock) "Do you have any place to stay tonight? Don't you dare lie to me."
Jeff Bridges was named top actor in a drama for the country music tale Crazy Heart.
Among the many people the actor thanked as he accepted the award was his late father, the actor Lloyd Bridges.
"He loved show biz so damn much. He encouraged all of his kids to go into show biz," he said. "Me being a young kid, you know, you don't want to do what your parents want you to do. I said, no, no. He said, come on, it's fun, let's go. [I'm] so glad I listened to you, dad, finally paid attention," he said.
Meryl Streep was named best actress in a comedy for the film Julie & Julia, the story of the late chef Julia Child.
Robert Downey Junior was named best comedy actor for Sherlock Holmes.
Honors for supporting performances went to Mo-Nique as an abusive welfare mother in Precious, and Christoph Waltz as a Nazi villain in the Quentin Tarantino film Inglourious Basterds.
Up was named best animated film. It also won for its original score.
The White Ribbon, a German crime mystery, was named best foreign language film. Director Martin Scorsese was honored for lifetime achievement.
There were references through the evening to last week's earthquake in Haiti, and many in the audience wore yellow, blue and red ribbons in honor of the victims. Hollywood celebrities, led by actor George Clooney, will stage a telethon Friday to raise funds for Haiti.
The Hollywood award season will come to a close March 7th with the Academy Awards, or Oscars, considered the highlight of the year in the movie business.