Joel Grey won an Oscar from his only nomination for portraying the Master of Ceremonies in Cabaret.
Joel Grey's performance here is quite interesting in that he really does not portray a character in the more traditional sense. The Master of Ceremonies does not really seem to be a real person but rather a symbolic creature of sorts. The Master is only seen on stage or briefly back stage. The only main character he interacts with is Liza Minnelli's Sally Bowles, and that is mostly in performing with her or introducing her. There are two incredibly brief moments where Grey interacts with her beyond performance, by they still do not suggest a man but a creature.
The Master of Ceremonies is just a device used in a film to give an interpretation or thematic narration of sorts of both the actions of the main story or the decay of Germany itself. This sort of device in a film could seem too odd, or too forced like in Bob Fosse's later film All that Jazz, but in this film it works incredibly well. I think part of the reason it works so well is Joel Grey's performance.
Grey's performance is a brilliant oddity that always amplifies the film it is in. Grey's creation of this creature that is the Master of Ceremonies is simply brilliant. He really does not seem to be a normal human being which works very well. He makes his odd gremlin like little man of sorts incredibly memorable. Whenever he is on screen he completely controls the screen with his strange but exceptionally compelling presence. Everything single one of his musical numbers or skits are made especially compelling because of the energy Grey puts into them.
Everything that Grey does in his performance simply adds to the film, and just works out perfectly. Every little moment he has he makes the most of it. He gives not only an entertaining performance, but one that does always suggest a wider meaning to what he is doing that surprisingly seems natural, well as natural as something like the Master of Ceremonies can be. Grey entire performance is simply a perfect example of a brilliant character creation, that utilizes just about everything he has to make a great performance which I believe is essential to the effectiveness of Cabaret on the whole.