The 24-year-old Miss New York is the first contestant of Indian heritage to become Miss America; her talent routine was a Bollywood fusion dance.
"I'm so happy this organization has embraced diversity," she said in a press conference after winning the crown in Atlantic City, N.J.'s Boardwalk Hall. "I'm thankful there are children watching at home who can finally relate to a new Miss America."
Her pageant platform was "celebrating diversity through cultural competency."
The native of Syracuse, N.Y. wants to be a doctor, and is applying to medical school, with the help of a $50,000 scholarship she won as part of the pageant title.
She is the second consecutive Miss New York to win the Miss America crown, succeeding Mallory Hagan, who was selected in January when the pageant was still held in Las Vegas. The Miss America Organization will compensate Hagan for her shortened reign.
Davuluri's victory led to some negative comments on Twitter from users upset that someone of Indian heritage had won the pageant. She brushed those aside.
"I have to rise above that," she said. "I always viewed myself as first and foremost American."
She had planned to go to the scene of a devastating boardwalk fire in the New Jersey communities of Seaside Park and Seaside Heights Monday afternoon. But pageant officials canceled that visit after learning that Gov. Chris Christie was making cabinet officials available at that same time to business owners victimized by the fire.
Davuluri will visit at an unscheduled future date, pageant officials said early Monday.
She will still make the traditional frolic in the Atlantic City surf Monday morning.
Her first runner-up was Miss California, Crystal Lee. Other top 5 finalists included Miss Minnesota, Rebecca Yeh; Miss Florida, Myrrhanda Jones, and Miss Oklahoma, Kelsey Griswold.
In the run-up to the pageant, much attention was given to Miss Kansas, Theresa Vail, the Army sergeant who was believed to have been the first Miss America contestant to openly display tattoos. She has the Serenity Prayer on her rib cage, and a smaller military insignia on the back of one shoulder.
Vail won a nationwide "America's Choice" vote to advance as a semi-finalist, but failed to make it into the Top 10.