Miss Finland, Sarah Dzafce, will be stripped of her crown, the beauty pageant organisers announced at a press conference on Thursday.
Dzafce — who was crowned Miss Finland in September — found herself in the eye of a social media storm after a photograph of her making an apparent racist gesture was posted on the Jodel platform.
The picture shows Dzafce pulling her eyes into a slanted shape with her fingers, with the text underneath reading (in Finnish), "kiinalaisenkaa syömäs" — which can be roughly translated as "eating with a Chinese person".
The image was widely interpreted as Dzafce mocking Asian people.
Dzafce initially defended the gesture, explaining that she had rubbed her temples and stretched her eyes because of a "severe headache".
However, the Miss Finland organisation, which manages the annual contest, said in its own statement on Wednesday that it does not accept racism or discriminatory behaviour in any form.
On Thursday, the organisation expressed its "sincere apologies" over the incident as it announced that Dzafce would be relieved of her title.
As a result of that decision, Tara Lehtonen — who finished as runner-up to Dzafce in September — will be the new Miss Finland.
Dzafce, who was born in Oulu and lives in Kuopio, has a foreign background through her Kosovan father. Her mother is Finnish.
"I am very sorry to everyone I have offended and hurt by my actions on social media," Dzafce said at Thursday's press conference, as reported by Iltalehti.