The pop superstar restarted her Sticky & Sweet world tour in the British capital but stopped the show to give her own personal tribute to Jackson, who passed away in Los Angeles last week.
The Material Girl recently confirmed that she planned to perform with Jackson at one of his 50 comeback concerts, which were due to kick off on July 13.
Madonna halted the gig halfway through while iconic images of the tragic star flashed up on screens behind her.
As the beat to Jackson's classic hit "Billie Jean" was pumped into the arena, one of her dancers, dressed in the King of Pop's trademark black and white with a wide-brimmed hat and white gloves, began performing Jackson's most famous moves -- including moonwalking across the stage.
The song turned into a medley with another classic Jackson hit, "Wanna Be Startin' Something", much to the delight of the London crowd.
Madonna told the audience, "Let's give it up for one of the greatest artists the world has ever known -- Michael Jackson!"
Later in the gig, the lyrics to Jackson's hit track "Man in the Mirror" were flashed up on screen as Madonna took to the stage wearing a black armband and a single white glove -- in honor of the late music legend.
In an interview before the concert, the star expressed her shock over the sudden passing of her friend -- and explained her onstage tribute.
She says, "I am so terribly sad about Michael Jackson's death. I don't know what artist wasn't inspired by him.
"I chose 'Billie Jean' (to perform at the O2) because it's instantly recognizable.
"Kento, my dancer, was obsessed with Michael all his life. And when Michael was having auditions for his tour, Kento really wanted to go but he'd already made a commitment to me. So now he's about to have his moment and be Michael at my show."
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