Flores, 22, was reinstated and awarded $153,000 on Tuesday by arbitrator Harold Reed. The retired Denver judge found the pageant "intentionally inflicted emotional harm and distress" on Flores.
Flores was stripped of her crown Dec. 30 in a dispute with pageant officials, who said she violated her contract when she got a part-time job at a department store without approval, got her mother to book her appearances and missed one appearance.
The college student, who is the first Hispanic Miss Colorado, said she was fired without cause. She sued to get her title back and the rights to the $11,000 in scholarship money she won.
"I hope this case will set a precedent not just in Colorado, but in other states as well about the way contestants are treated," she said at a news conference to announce the judge's ruling.
Reed sided firmly with Miss Flores after a three-day hearing, dismissing one of the pageant's causes for termination - that she failed to agree to fly to Russia for an appearance - as "absolutely ludicrous." Reed said no such trip was ever planned.
Flores said Colorado pageant officials sent investigators to New Mexico to find out if she was married in an effort to cancel her contract. She said Miss America pageant officials told their counterparts to record her phone conversations and said if she didn't shape up to "get rid of her."
The conflict trickled into other events. At least four directors of various city pageants resigned and several city-level pageants were canceled. Organizers of one event canceled the appearance of runner-up Gina Waegle, who replaced Flores as queen.
The ruling ordered the pageant to allow Miss Flores to finish serving her tenure, which ends next month. She is finishing up her senior year at the University of Colorado, where she is studying music education.
Pageant director Vonnie Pederson, who also is Hispanic, denied any racism was involved.