Kalo Funganitao accused organisers of the Miss Heilala beauty pageant of tormenting and bullying her before leaving the stage without crowning the new winner, Yehenara Soukoup.
The executive committee of the Tonga Tourist Association, which organizes the annual pageant, issued a statement saying Miss Funganitao had not fulfilled the requirements of her position and that all records of her reign would be removed.
"It is regrettable that as an ambassador of Tonga Miss Funganitao has not fulfilled her duties and obligations," the committee said.
Last year's runner up, Lupe Vete, will be recognised as Miss Heilala for the 2018 to 2019 period.
But the committee, which is under the leadership of Tourism Minister and Deputy Prime Minister Semisi Sika, did not respond to accusations in Miss Funganitao's speech.
She also claimed that the committee has lied, cheated, and failed to fulfill what was promised to her as Miss Heilala.
Miss Funganitao said her family had to cover some of her travel expenses to Miss Heilala functions.
As the Auckland University law student gave her speech the DJ was ordered to play loud music to drown her out before her microphone was cut.
The controversy has exposed the impact of online bullying, a women's rights advocate says.
Director of Tonga's Women and Children's Crisis Centre Ofa Guttenbeil-Likiliki said the outgoing queen had to endure a year of online harassment with little support.
Pageant organisers had handled the whole situation poorly, Ms Guttenbeil-Likiliki said.
"Online bullying is very new to Tonga. Our structures and our frameworks have completely no idea of how to handle online bullying situations," she said.
"It's really messy and ugly and uncalled for. But unfortunately no one in Tonga knows how to handle it. They've never had to handle such a situation before at a national level."
Tongans needed to reflect on their traditional pillars of humility, respect, love and nurturing relationships, the advocate said.
Her organisation believes that "gone are the days of beauty pageants", a conversation Ms Guttenbeil-Likiliki said was difficult to have in Tonga.
The country can do more to attract tourists than a single event that focuses on the concept of western beauty, she said.
"We don't wear swimsuits to the beach. It's just so un-Tongan. I think we need to get back to our roots and create programmes that will attract tourists to experience the real Tonga.