The 24-year-old Miss New York is the first contestant of Indian heritage to become Miss America. She wowed the judges with a Bollywood fusion dance for her talent routine.
Davuluri described how delighted she is that the nearly century-old pageant sees beauty and talent of all kinds.
"I'm so happy this organization has embraced diversity," she said in her first press conference after winning the crown in 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."
Davuluri succeeds Mallory Hagan, another Miss New York.
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.
Monday, Davuluri will visit the scene of New Jersey's devastating boardwalk fire to support the reconstruction efforts.
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.
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.
The Associated Press contributed to this report.