The 31-year-old Indian actress burst into tears on hearing she had won the public vote.
The experience on the Channel 4 show had been "incredible and overwhelming", she said after winning the show last night.
Asked about the race row by host Davina McCall, Shilpa insisted ringleader Jade Goody "didn't mean to be racist".
Shilpa was the firm favourite to win the contest, considered the most controversial in the show's history after she became the victim of alleged racist bullying by fellow contestant Goody.
The Bollywood actress profusely thanked the public for a "fantastic opportunity to make my country proud".
Runner-up Jermaine Jackson, the brother of pop star Michael, said he was "very happy" as he departed the house.
Former beauty queen Danielle Lloyd, one of the contestants implicated in the racist abuse, earlier apologised for her remarks to Shetty.
Lloyd, 23, and fellow evictee Jack Tweed were greeted with heavy booing as they left the house in the first round of evictions held during the final show last night.
Both were upset when shown footage of their behaviour towards Shetty, whose treatment at the hands of some of her housemates sparked a global race row.
"I feel terrible," said Lloyd. Tweed, boyfriend of Jade Goody, said it had nothing to do with skin colour.
Both model Lloyd and Tweed were implicated in the race row, alongside singer Jo O'Meara.
Lloyd immediately apologised for her behaviour towards Shilpa in an interview with host Davina McCall. Lloyd said her remarks had been made "in the heat of the moment."
"I wasn't laughing at Shilpa... it was just nerves," said Lloyd. "I hate confrontation."
Asked what she had learned on the show, Lloyd said: "Not to be such a bitch."
The contestants had been locked up in a house since January 2 and were filmed on how well they handle the frictions of daily life and get their fellow housemates' votes of confidence.
On Friday, former S Club 7 star Jo O'Meara, after her eviction, denied that she was racist. "It's not because I'm racist at all. I think she's a very beautiful, very elegant woman. I can't say I am sorry for something I am not guilty of."
Singer Ian 'H' Watkins, the third person to be evicted in the final show, told McCall that he felt "completely out of my depth" when fighting in the house was at its most intense.
"I just think I've led a very sheltered life and I just back away from things like that."
