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 her first 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."
After the traditional frolic in the Atlantic City surf Monday morning, she will head to the scene of a devastating boardwalk fire in the New Jersey communities of Seaside park and Seaside Heights Monday afternoon.
Her first runner-up was Miss California, Crystal Lee.
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.
In a Twitter message Sunday before the finals began, Vail wrote: "Win or not tonight, I have accomplished what I set out to do. I have empowered women. I have opened eyes."
Jones made it into the top 5 wearing a bedazzled knee brace. She tore knee ligaments Thursday while rehearsing her baton-twirling routine, which she executed flawlessly Sunday night.
The pageant had pitted 53 contestants -- one from each state, plus the District of Columbia, Puerto Rico and the U.S. Virgin Islands -- in swimsuit, evening gown, talent and interview competitions.
Sam Haskell, CEO of the Miss America Organization, said he was thrilled it all played out in Atlantic City after a six-year stint in Las Vegas.
"This is where we belong," he told The Associated Press. "This is the home of Miss America, and this is where we're going to stay."
The pageant started in Atlantic City in 1921 as a way to extend the summer tourism season for an extra weekend.