How The Oscars Are Decided

From this excellent article:

Picking the Winners

The first stage in selecting Oscar winners is narrowing all the possible honorees in a given year down to five nominees for each award category. To be eligible for nominations in any of the feature film categories, a movie must meet these basic requirements:

• It must be more than 40 minutes long.
  
• Its public premiere must have been in a movie theater, during the appropriate calendar year (during 2003, for the 76th Academy Awards).
  
• It must have premiered in 35mm or 70mm film format or in 24-frame, progressive scan digital format.
  
• It must have played in an L.A. County theater, for paid admission, for seven consecutive days, beginning in the appropriate calendar year.
  
• If a producer or distributor would like their eligible film to be considered for an Oscar nomination, they must submit an Official Screen Credits form. This form lists the production credits for all related Oscar categories. The Academy collects these forms and lists the submitted films in the "Reminder List of Eligible Releases." In January, the Academy mails a nomination ballot and a copy of the "Reminder List" to each Academy member.
  

For most of the award categories, only Academy members in that particular field are allowed to vote for nominees (that is, only directors submit nominations for best director and only editors submit nominations for best editor). Foreign film and documentary nominees are chosen by special screening groups made up of Academy members from all branches, and everybody gets to select best picture nominees. Foreign film nominees are selected from a list of films submitted by foreign nations. Every foreign country can only submit one film per year.

An Academy member can select five nominees per category, ranked in order of preference. For most categories, voters write in only the film title. For acting categories, the voters pick specific actors. It's up to the individual Academy voters to decide whether an actor should be nominated for leading role or supporting role. An actor can't be nominated for both categories for a single performance, however. The Academy assigns the nominee to whichever category the nominee qualifies for first. Producers often take out ads in Variety and other major movie industry magazines to suggest nominees for particular categories.

Academy members typically have a couple of weeks to submit their choices for nominees. Once the ballots are in, the accounting firm PricewaterhouseCoopers tabulates the nominee ballot votes in secrecy. Soon after, the Academy announces the nominees in an early morning press conference at the Samuel Goldwyn Theatre in Beverly Hills.

A week or so later, the Academy mails final ballots to all Academy members. Members have two weeks to return the ballots, and then the "polls" are closed. Pricewaterhouse Coopers tabulates the votes in absolute secrecy and seals the results.

While all this is going on, production companies are sinking considerable funds into campaigning for their contenders. The Academy condones any efforts to get Academy members to see the films, but restricts production companies from mailing out inappropriate incentives. Production companies are allowed to send Academy members video copies of contender films, and to organize special screenings of their films.