The 23-year-old beauty queen beat out 52 contestants and wowed the panel of seven judges with her opera singing and black beaded evening gown during the ABC telecast.
Kaeppeler also had to answer a question about whether beauty queens should declare their politics.
"Miss America represents everyone, so I think the message to political candidates is that they represent everyone as well," she said. "And so in these economic times, we need to be looking forward to what America needs, and I think Miss America needs to represent all."
Miss Oklahoma Betty Thompson came in second, while Miss New York Kaitlyn Monte placed third. Miss California was one of five semifinalists.
Kaeppeler received a $50,000 scholarship. She said she plans to get her master's degree and become a speech therapist one day.
As the new Miss America, Kaeppeler will spend the next year touring the country to speak to different groups and raising money for the Children's Miracle Network, the Miss America Organization's official charity.
The Associated Press contributed to this story.