Ryan, a pint-sized singer with a larger-than-life voice, was selected by the TV viewing audience.
"How do you feel?" host Regis Philbin asked Ryan as he handed her the $1 million prize. "Awesome," a tearful and awestruck Ryan said. "I don't even know."
Performers of all ages took part in the variety and novelty act competition judged by a celebrity panel including actor-singer David Hasselhoff, R&B singer Brandy and British journalist Piers Morgan. The trio determined which acts made it to the semifinals.
The Philadelphia native won her spot in the finale via an audience vote on July 27.
Ryan beat out Taylor Ware, an 11-year-old yodeler from Tennessee, and Celtic Spring, an Irish fiddle and dance band from Ojai, Calif. Both acts were voted into the top three.
Regis Philbin sang on the live finale while the Blue Man Group and teen rock-pop duo Aly & AJ also performed.
Wednesday night's episode of the show featured performances from the 10 final acts who received expert advice from hip-hop mogul Master P, singer Chaka Khan, Blues Traveler's John Popper and Penn & Teller among others.
On Wednesday's episode, Ryan was coached by her idol, Grammy-winning gospel singer Yolanda Adams.
"She has it already, it's innate, it's in her," Adams said of Ryan. "There's not really much that I could teach her."
Hasselhoff compared Ryan's voice to that of Liza Minnelli after her performance Wednesday.
The reality show was created and produced by "American Idol" judge Simon Cowell.
By Amy Bonawitz