But her halo quickly slipped, with social media users digging out a series of tweets she had sent in 2013 and 2014 using the N-word.
Kamie Crawford, a former Miss Teen USA, said she was shocked by the discovery, because she couldn't understand why Miss Hay was so ill prepared for media attention.
"If you win any pageant - first things first. Clean up your page.
"Because if you're under 21, you shouldn't be drinking and if you're white, the N-word ain't your word," said Miss Crawford.
Miss Hay apologised for using the racial slurs, saying she had "a number of personal struggles" several years ago and found herself "in a place that is not representative of who I am now."
She continued: "A few years ago, I used language that is inexcusable, and I sincerely apologize for my actions.
"Through hard work, education, maturity and thanks in large part to the sisterhood that I have come to know through pageants, I am proud to say that I am today a better person.
The Miss Universe Organization supported Miss Hay, but also branded her language "unacceptable" in a statement on Sunday.
"The language Karlie Hay used is unacceptable at any age and in no way reflects the values of The Miss Universe Organization," the statement read.
"As Karlie stated, she was in a different place in her life and made a serious mistake she regrets and for which she sincerely apologizes. Karlie learned many lessons through those personal struggles that reshaped her life and values. We as an organization are committed to supporting her continued growth."
Criticism over lack of diversity
The top five contestants in this year's Miss Teen USA have a lot in common: They're blonde, blue-eyed and fair skinned. And model and TV host Chrissy Teigen is not impressed.
After current Miss Teen USA Karlie Hay shared a picture of this year's top five, Teigen retweeted it, adding her own thoughts about the selection.
Wife of musician John Legend, Teigen wrote: "Wow how can we choose from such a diverse bunch."
Followers were quick to comment. Lindsey Weber wrote: "@chrissyteigen do they know it's the same girl five times", while another asked if they were going to reveal the other four finalists tomorrow.
Teigen's tweet was shared over 68,000 times and eventually she posted a follow-up, renegging slightly on her initial outburst.
"It's fiiiiiine. Not their fault. I'm sure they are delightful women. Just funny. I'm not gonna write a think-piece on a damn pageant."