Iraqi-born Huda Falah was on Tuesday named Miss Headscarf 2008, beating 46 contesters in the competition organized by Danish public broadcaster DR.
Falah, 18, won the competition that was open to anyone aged 15 or older.
"The woman is like a diamond and you don't show it to everyone," Falah said in an interview with the broadcaster, adding she entered the competition in order to help bridge the divide between Muslim and Danish youth.
The broadcaster's 15-19 online community DR Skum announced the competition in May, but underlined it was a fashion contest, not a beauty contest and open to anyone - regardless of religion.
Skum then said they believed the project would display the 'cool Muslim women' who 'often make up a very fashion-conscious and style-confident part of the Danish street scene'.
"The royal blue headscarf makes a sharp contrast to her dark brown skin," said one of the two fashion judges, Muslim fashion commentator Helen Latif.
Co-judge and fashion expert Uffe Burchardt said Falah's headscarf had "a fantastic and stunning colour that really shows attitude and impact."
Falah, currently studying to become a social or health worker, said she had worn a headscarf since she was aged nine after seeing her mother and cousins wear them.
Muslim headscarves or hejab have recently been the focus of a heated debate in Denmark amid a proposal that judges should be banned from wearing hejab or other religious symbols like a crucifix, turban or skullcap in courtrooms.
Muslim organizations said they feared the proposed move will likely be extended to other groups like nurses, doctors and police officers.