updated 01/19/2014 AT 6:00 PM ET
•originally published 01/19/2014 AT 3:00 PM ET
Sasha and Malia Obama watched in awe as Beyoncé sang, while elsewhere, Paul McCartney danced and Hillary Clinton schmoozed. “It was just an incredible party,” the guest told PEOPLE, “chock-full of celebrities.”
And, just as she wished for, the birthday girl danced. And danced. Wearing a long red jumpsuit reminiscent of her 2012 Inaugural gown, Mrs. Obama arrived laughing and never stopped beaming. “She was enthralled. You could tell she had a lot of fun,” says the guest.
Smokey Robinson greeted Hillary Clinton with a bear hug at the North Portico door where she’d been talking with Democratic Party donors, while Bill Clinton chatted with Jennifer Hudson. Top White House adviser Valerie Jarrett was on the arm of NFL veteran and sportscaster Ahmad Rashad. James Taylor held court with House Minority Leader Nancy Pelosi, who later tried to get a dance with McCartney, who only had eyes for his wife of two years, Nancy Shevell.
“Sir Paul didn’t allow many people to come between him and his bride. He came to party!” says the source. “He pulled his jacket off, put it at Valerie’s table and then danced away with his wife.”
To fuel all that partying, there were mini crab cakes, fried oysters on toast rounds, roast beef sliders and champagne. When the birthday cake was brought out, John Legend sang two different renditions of “Happy Birthday” – the standard-issue version, then a jazzier take.
Among the other stars spotted in the crowd were Stevie Wonder, Gladys Knight, Janelle Monae, Mary J. Blige, Angela Bassett, Courtney Vance, Herbie Hancock, Samuel L. Jackson, Grant Hill, Alonzo Mourning, Ledisi, Emmett Smith, Star Jones, Al Roker, Steve Harvey, Magic Johnson, Billie Jean King and Michael Jordan.
Vice President Biden worked the room, as did the Clintons, who avoided the dance floor, our source says.
“They said there were 500 people there, but it felt like more,” a second guest tells PEOPLE. “Still, it somehow felt so intimate. And everyone got teary when Barack spoke.”
The President gave a “moving tribute to his wife, recounting the first time he laid eyes on her, how he was soaking wet and had on bad shoes but she didn’t hold it against him,” the first source reported. “He thanked her for being patient with him. You could tell he had married his best friend.”
Beyoncé, who brought her mother with her and wore a cream-colored and feathered mini dress, performed a mini concert of a half-dozen hits, including “All the Single Ladies.”
DJ Cassidy took over around midnight, Bey changed into slippers to hit the floor herself, and Mrs. Obama slipped upstairs. “Around 1:15, she came back down. She’d taken off her heels and put her hair up and that’s when the party kicked into another gear. Every woman in that place took their shoes off!”
During DJ Cassidy’s set, Stevie Wonder got behind a keyboard and played an impromptu medley of songs.
“At 2 a.m., there were the President and First Lady on the dance floor with a circle around them,” says the first guest. “It was Beyoncé and some of her dancers and the Obamas were more than keeping up. It looked like they got briefed on all the new moves. The First Lady danced like she was one of her daughters’ generation.”
Guests had been greeted by a “cell phone check” table where they deposited their camera phones on arrival and it was understood that this was not an occasion for Tweeting party photos or Facebooking details. So Ledisi played it safe, posting an Instagram photo of her feet at 3 a.m. along with a message that summed it all up: “What a night! Our feet hurt! lol!”