Red Cadeaux strode to the lead in the last straight of the 2-mile (3,200-meter) classic but was overhauled on the inside by five-year-old Protectionist, who went on to win by four lengths in only his 10th race.
"We've had great success all over the world but that's the biggest of all," winning trainer Andreas Wohler said. "When he came round the last bend, I (said) he just needs to have the right gap and he found it, and he quickened so well."
Wohler described winning jockey Ryan as "a superstar," and added: "It's a big achievement from our team."
Red Cadeaux placed second for the third time in four Melbourne Cups, becoming the first three-time runner-up. Who Shot The Barman was another half-length behind in third place in the A$6.2 million ($5.4 million) race.
"He ran a super race like he always does. Very big heart and he tried so hard all the way," Red Cadeaux jockey Gerald Mosse said. "Just found one too good for him again."
Admire Rakti was the favourite in the 154th Melbourne Cup after winning the Caulfield Cup last month but, after being among the front-runners in the early going, faded suddenly midway through the race and finished a distant last in the 22-horse field.
The seven-year-old Japanese stayer collapsed and died shortly after returning to the stalls, Racing Victoria chief steward Terry Bailey said.
The cause of death was yet to be determined, "although the circumstances of the horse's passing are very rare," Dr. Brian Stewart, Racing Victoria's head of veterinary and equine welfare, said in a statement.
Stewart said a post mortem examination would be conducted at the University of Melbourne Veterinary Hospital.
Admire Rakti was owned by Riichi Kondo and trained by Tomoyuki Umeda.
In another post-race incident, seventh-place Araldo broke its leg on the way back to the stalls and had to be euthanized. Racing Victoria said the horse was spooked by a flag waved by a person in the crowd and, in retreating, kicked out and fractured a pastern bone in its hind leg on a fence.
Jockey Zac Purton rode Admire Rakti and said he could tell there was something wrong during the race.
"I knew he was in trouble when he didn't tow me into the race around halfway from home," Purton was quoted as saying by the Australian Broadcasting Corp. "So I eased him down straight away, the horse's welfare comes first.
"It's very sad. He gave me a great thrill at Caulfield, and for this to happen to him is just not fair."
Araldo, trained by Mike Moroney, got through the race unscathed but sustained injuries in the post-race incident that veterinary experts said were too severe to recover from.
"He got spooked by a big flag after the Cup and ran away from it," Moroney said. "It is so sad for the staff and the owners. He was such a lovely horse and he ran terrific in the Melbourne Cup.
"It was a freak accident. They run the Melbourne Cup for 154 years and nothing like that has happened."
Stewart said the owners made the decision to humanely euthanize Araldo.
Last year's race was also marred by a fatal injury to the Aga Khan's first Melbourne Cup runner, Verema. The French-bred mare was believed to have snapped a cannon bone during the race.