"I'm so happy this organization has embraced diversity," she said. "I'm thankful there are children watching at home who can finally relate to a new Miss America."
Davuluri's pageant platform was "celebrating diversity through cultural competency." Her talent routine was a Bollywood fusion dance.
The 24-year-old is the second Asian-American winner, after Angela Perez-Baraquio, who is of Filipino descent, and won in 2001.
Davuluri, a 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.
Monday morning, she took the traditional ocean frolic dip in the Atlantic City surf in front of Boardwalk Hall, where she won the title hours earlier. The pageant, which originated in Atlantic City 1921, spent the last six years in Las Vegas before returning to New Jersey.
"Welcome home, Miss America!" Davuluri said as she stood barefoot in the shallow surf, wearing a lime green Miss America T-shirt and white shorts. "We're back in Atlantic City!"
Her grandmother told The Associated Press that she cried when she saw the news on television.
"I am very, very happy for the girl. It was her dream and it was fulfilled," 89-year-old Vege Koteshwaramma said by phone from her home in the city of Vijaywada, in the southern Indian state of Andhra Pradesh.
She said there are numerous doctors in the family, both in the U.S. and India, and that if her granddaughter wants to become one, "I am sure she will do it."
Asked about her granddaughter appearing in a bikini, given the conservative attitudes about such things in India, Koteshwaramma said: "I haven't seen any such thing. This must be all part of the competition."
Davuluri had planned to go to the scene of a devastating boardwalk fire in the New Jersey communities of Seaside Park and Seaside Heights on 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.