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Palacios, 23, beat out 83 other women at the pageant in Sal Salvador, El Salvador. It's the first time in history that Nicaragua has won the Miss Universe competition, making Palacios' victory momentous.
Palacios has a mass communications degree from the Universidad Centroamericana, which she takes pride in because she had anxiety attacks during her studies, according to her contestant bio.
Take a look at the five outfits Palacios wore during the competition.
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Palacios donned a sheer beaded gown during the preliminary competition.
Miss Nicaragua during the Miss Universe preliminary competition on November 15.Hector Vivas/Getty Images
Palacios kicked off the competition in a glittering pink minidress.
Left to right: Miss Nicaragua, Miss Spain, Miss Puerto Rico, Miss Namibia, and Miss Venezuela. Alex Peña/Getty Images
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Palacios' national costume drew inspiration from a bird native to Nicaragua.
Miss Nicaragua during the national costume competition. Courtesy of Miss Universe
During the swimsuit competition, Palacios wore a baby pink strapless bikini.
Miss Nicaragua during the swimsuit competition.Hector Vivas/Getty Images
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Her evening gown featured an assortment of jewelry and a blue cape.
Palacios during the evening gown round at Miss Universe.Hector Vivas/Getty Images