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Songs covered by another artist

"Girl, You'll Be a Woman Soon" by Urge Overkill (original by Neil Diamond)
"Take On Me" by Weezer (original by a-ha). I love the meta-ness of the Weezer video (below). A real band playing a fake band featuring a "young Rivers Cuomo", set in the '80s.
 
This sorta meets the criteria in a bass ackward kinda way: George Harrison wrote "Sour Milk Sea" for Jackie Lomax, who recorded it. But then Harrison did his own "cover" which was later added to the original instrumental mix that included Harrison, McCartney, Starr, and Clapton. I much prefer this version:

 
Scissor Sisters had a minor hit with Comfortably Numb (Pink Floyd)
The Who had a hit single with Summertime Blues (Eddie Cochrane)
Cake did a great cover of I Will Survive (Gloria Gaynor)
And then there are covers that completely eclipsed the original such as Todd Rundgren's solo cover of his own original with The Nazz of Hello It's Me, or Nilsson's cover of Badfingers Without You.
 
Don Henley’s Boys of Summer by the Ataris is killer. As is John Mayer‘s Axis Bold as Love (Hendrix).

I am not a Whitney Houston fan, but Dolly Parton made more $$$ from Whitney’s I Will Always Love You than any of her other songs. Same with Springsteen with Manfred Man’s Blinded by the Light.
 
Frank Sinatra's cover of Sergei Rachmaninoff's second piano concerto, the third movement, in Sinatra's interpretation "Full Moon and Emply Arms ... (Wether it's actually "better than the original" depends on the pianist interpreting Rachmaninoff ...)
 
I don't know if Just Another Manic Monday by The Bangles count, because I don't think Prince ever recorded it.
Legend has it that Prince wrote and recorded the demo for "Manic Monday" and that he sent it to The Bangles as a cassette simply labeled "record this", so technically...

He also originally wrote and recorded Sinead O'Conner's "Nothing Compares 2 U" and Chaka Khan's "Feel For You". An incredible talent.

Unrelated, the Byrds' cover of Dylan's "My Back Pages" is one of my favorites. As has been mentioned, Hendrix's "All Along the Watchtower" is possibly the best cover song ever.
 
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