Colombia contestant Ariadna Gutierrez Arevalo was already wearing the crown when Harvey realised his mistake.
He meant to announce Arevalo as the runner-up and Pia Alonzo Wurtzbach of the Philippines as the winner.
Arevalo appeared stunned as last year's Miss Universe removed the crown – worth a staggering £20,000 – and placed it on Wurtzbach's head instead.
Harvey took to Twitter to apologise for the embarrassing mix-up.
He wrote: "I'd like to apologise wholeheartedly to Miss Colombia & Miss Philippines for my huge mistake. I feel terrible."
He added: "I don't want to take away from this amazing night and pageant. As well as the wonderful contestants. They were all amazing."
the Colombian contestant smiling, thinking she had won...sad
The long-running pageant was involved in another controversy before Sunday night's bizarre blunder.
Donald Trump, the pageant's former owner, sold the organisation that owns Miss Universe in September.
Spanish-language broadcaster Univision refused to air the contest after Mr Trump made controversial comments about Mexican immigrants.
Shortly after last night's confusion, Colombian president Juan Manuel Santos tweeted a message to Arevalo.
He wrote: "For us, you will continue being Miss Universe! We are very proud!"
And the Philippines' presidential spokesman said Wurtzbach "serves as a tremendous source of pride for our people".
this is the original winner, she was shocked to discover she had won
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