Covington came out all guns blazing in the first round, swinging and kicking wildly, but he struggled to connect.
Usman had the upper hand from the opening stages as he landed some brutal body blows and secured two knockdowns in the first couple of rounds.
Watch UFC 268: Usman vs Covington 2 LIVE on Main Event available on Kayo and Foxtel, Sunday 7th November from 1pm AEDT. ORDER NOW >
Covington was cut badly under his eye in the first round after a nasty head clash between the two fighters.
But he fought back, engaging in some rapid fire punching exchanges throughout the remainder of the bout.
The third round was the American's best as he landed some strong punches and almost took Usman down, but the champion just managed to stay on his feet.
Bloodied and bruised, Covington threw everything he had at Usman in the last two rounds as the fight went the distance.
He attempted to wrestle with Usman on the ground a couple of times but the Nigerian was impenetrable and continued to land strong uppercuts and kicks on his opponent.
After some close rounds, the fighters exchanged some terse words and smirked at each other.
The pair previously fought at UFC 245 in a classic fight as Usman claimed the victory via a fifth round TKO and the war of words has been bitter.
But that hostility was put aside after a brutal five rounds at UFC 268, with Usman and Covington coming together in a close embrace after the final bell and sharing some kind words.
Usman retained his belt as the judges awarded him the victory in a unanimous decision (48-47, 48-47, 49-46).
There was an amusing moment at the conclusion to the fight when the referee had to separate Covington and Usman as they continued to give each other compliments just moments after battering each other.
"Go kiss later," referee Dan Miragliotta was heard telling the duo, forcing them apart and back to their respective corners.
"I really liked the end where they gave each other some respect," commentator Joe Rogan said.
"I really enjoyed that. Even though I know Colby has the act to keep up, he dropped it at the end and he said, ‘Nothing but love and respect’ and they hugged.
"I loved the fight and I enjoyed that as much. I think that was a big moment."
MMA legend Daniel Cormier added: "You saw Colby Covington drop the mask for a second.
"But then as he ended it, he went right back to Colby, ‘I’m not done yet. I’ll be back’."
Speaking after the fight, Usman said he had a lot of respect for Covington.
"I got to give it up, I know there’s a lot of trash talk, there’s a lot of bad blood here and I’m sure there’s still going to be some after tonight," he said.
"But this guy’s a tough son of a b*tch. He’s tough as sh*t.
"When you share an octagon with someone this tough, you can’t help it. That respect is going to come.
"He hit me with some shots. I could tell him and his coaches had been working on it. His technique is down, his power came up a little bit and I could tell they’ve been working on it so I had to show him that respect.
"I am the pound for pound best alive right now. I’ll tell you what he’s tough, super tough.
"I wanted to get crazy and get him out of there but that’s not what the best do. We take our time, we stay calculated, we listen to our coaches and we find the finish.
"Unfortunately, that’s the next best guy in the division. He’s a tough son of a gun and he wasn’t going to let me find that finish."
Covington was gracious in defeat.
“I had my moments," he said.
"I wobbled him a couple times at the end of the round. Just wasn’t able to capitalise.
"It was his night, he had a better night."
Updates
Round 1: Welterweight champion Usman clearly looks the stronger of the two fighters. Covington is swinging and kicking wildly but has barely connected and is also nursing a bloody cut under his eye after a nasty head clash with Usman.
Round 2: Usman is well on top, landing a brutal short left hook on Covington and then connecting with another to his temple, knocking him down. Usman had two takedowns and also landed some huge body shots.
Round 3: Covington's best round so far, landing a couple of strong punches on Usman in some quick exchanges. He nearly took down Usman but the champ just managed to stay on his feet.
Round 4: Usman is staying composed and is on top, but both he and Covington landed some sharp blows in some rapid exchanges. Usman landed an uppercut to finish the round that stung Covington.
Round 5: A closely-fought final round with both fighters landing blows. Covington had to pause the fight after Usman accidentally poked him in the eye and was hit by a strong kick to the chin once it resumed. The pair embraced after the fight and shared a nice moment with each other.
Rose Namajunas has defended her strawweight championship belt with a split decision victory over Zhang Weili in the co-main event fight.
It was a closely fought fight with Zhang landing some strong outside leg kicks and Namajunas dominating when she took Zhang to the ground and grappled her.
The fight was even heading into the fifth and final round but Namajunas took Zhang down early and stayed on top of her and was in control for the remainder of the round.
She won 48-47, 47-48, 49-46.
Marlon 'Chito' Vera has caused a huge upset by defeating Frankie Edgar in their bantamweight bout.
The decisive moment came in the third round when Vera landed a brutal front kick to Edgar's face, knocking him out and ending the fight there and then.
Vera connected hard with Edgar's jaw in an impressive move that looked as if he was kicking a door down.
UFC knockout artist Justin Gaethje has taken down Michael Chandler in a rollercoaster fight.
Gaethje had to fight back after eating some heavy shots in the opening round before the fight was turned on its head when Gaethje started landing his reckless strikes.
Chandler struggled to return fire in the third round after Gaethje left his face beaten bloody in the second round.
"These dudes are going crazy," UFC legend Daniel Cormier said in TV commentary.
The fight was followed by another bonkers brawl where Shane Burgos def and Billy Quarantillo went to war.
Preliminary UFC stats recorded 740 combined strikes between Burgos and Quarantillo.
UFC boss Dana White has an impossible decision to make when he comes to announce the fight of the night and the $50,000 bonus.
UFC debutant Alex Pereira was worth the wait.
The former kick-boxing world champion has made a thunderous debut in the UFC with a TKO win over Andreas Michailidis.
As the top fight on the preliminary card, Pereira demolished Michailidis with a flying knee just 75 seconds into the first round.
Pereira thought he had done enough for a walk-off KO, but had to finish the fight with strikes on the ground.
Rogan was in awe of the fighter in the commentary.
"It’s a different kind of power. You can’t stand in front of that man," Rogan said.
"That dude’s made out of mahogany. When you touch him, it feels like wood.
"He does that to everybody. He does that to world class kickboxers. It’s like he’s built differently. He hits them and dudes just go flying."
Pereira had previously beaten UFC champion Israel Adesanya in a kickboxing contest.
Chris Curtis flipped the script of his fight with Phil Hawes with one clean left-hand hook that caught his opponent on his way in.
Hawes immediately staggered on his feet before the fight was finished off with another punch on the ground.
Curtis had been in trouble earlier in the first round – but none of that mattered when he landed that left hand.
UFC fighter Edmen Shahbazyan showed amazing heart to survive a second round beating, but was eventually beaten via TKO in a scary fight.
Shahbazyan escaped choke holds on multiple occasions and was still in the contest after a gruesome cut was opened up above his eye socket.
Nassourdine Imavov opened the wound above his opponent's eye with an elbow that sandwiched Shahbazyan's head between his strike and the floor.
The fight was finally stopped several moments later when the referee ruled Shahbazyan was unable to defend himself as a result of another flurry of elbow strikes.
UFC talent Ian Garry has made an explosive debut in the UFC with an impressive first round knockout.
The Irish fighter earned the respect of Conor McGregor, who tweeted his appreciation for the performance on social media.
Garry showed incredible power to drop Jordan Williams with an off-balance right hook with just seconds left in the first round.
"You little f***in daisy, Ian! The step back, back paw and all ahahahaja just absolutely incredible," McGregor posted on Twitter.
Fighter Chris Barnett has put his name up in headlines after a staggering KO finish in his heavyweight fight with Gian Villante.
Barnett had the fight stopped in the second round on the back of a sweet spinning wheel kick that dropped his opponent.
The 35-year-old dived in to finish it off with hammer fist shots on the ground before the fight was stopped by the referee.
The TKO victory pushed Barnett towards cult-hero status just two fights into his UFC career.
He celebrated in emphatic style with a forwards flip where he landed cleanly on his backside.
"OH MY GOD!!!! Chris Barnett with a spinning wheel kick knockout on Gian Villante. That was INSANE," UFC reporter Damon Martin posted on Twitter.
You can watch the impressive performance in the video player above
Main Card
Kamaru Usman vs. Colby Covington – Usman’s UFC welterweight title
Rose Namajunas def. Zhang Weili via split decision (48-47, 47-48, 49-46)
Marlon 'Chito' Vera def. Frankie Edgar via front kick KO (20-18, 19-19 x2)
Shane Burgos def. Billy Quarantillo via unanimous decision (29-28 x3)
Justin Gaethje def. Michael Chandler via unanimous judges decision (30-27, 29-28 x2)
Preliminary card
Alex Pereira def. Andreas Michailidis via TKO (flying knee, punches, round 1)
Bobby Green def. Al Iaquinta via TKO (Right hook strike and follow up ground punches, round 1)
Chris Curtis def. Phil Hawes via TKO (Striking with follow up punches, round 1)
Nassourdine Imavov def. Edmen Shahbazyan via TKO (elbows, round 2)
Early prelims
Ian Garry def. Jordan Williams via KO (right hook, round 1)
Chris Barnett def. Gian Villante by TKO (spinning wheel kick and punches – round 2, 2:23)
Dustin Jacoby def. John Allan by unanimous decision (29–28, 29–28, 30–27)
Melsik Baghdasaryan def. Bruno Souza by unanimous decision (29-28, 29-28, 29-28)
Ode’ Osbourne def. CJ Vergara by unanimous decision (29–28, 29–28, 29–28)
