The Muslimah World contest to be held on Wednesday in the Indonesian capital, Jakarta, is "Islam's answer to Miss World", the pageant's founder Eka Shanti said on Saturday.
"Muslimah World is a beauty pageant, but the requirements are very different from Miss World - you have to be pious, be a positive role model and show how you balance a life of spirituality in today's modernised world," Shanti told AFP.
The pageant is the latest backlash against Miss World, which has already dropped the bikini from its beach fashion round and has attracted more than a month of protests by Muslim hardliners demanding the show be scrapped.
Radicals have set effigies of the organisers alight and deemed the contest "smut" and "pornographic".
The 20 Muslimah World finalists were chosen from more than 500, who took part in online rounds, reciting Koranic verses and telling stories of how they came to wear the Islamic headscarf, a requirement for the pageant.
The finalists, from Iran, Malaysia, Brunei, Bangladesh, Nigeria and Indonesia, will parade Islamic fashions in what Shanti says is an opportunity to show young Muslim women they do not need to show their "immodest" parts - including their hair and bare shoulders - to be beautiful.
But Shanti said she did not support hardliners' calls to cancel the Miss World contest, acknowledging that Indonesia was a diverse country with many faiths.
"We don't just want to shout 'no' to Miss World. We'd rather show our children they have choices. Do you want to be like the women in Miss World? Or like those in Muslimah World?" Shanti said.
After repeated protests, government officials announced last week that the Miss World final would be moved from the outskirts of the capital Jakarta to the resort island of Bali, where the contest began last week with no opposition from the Hindu majority there.
The organisers, however, were not party to the decision and have said it would be "impossible" to make the last-minute change.
Despite the decision, protestors from the Islamic group Hizbut Tahrir Indonesia demonstrated in the central Java city of Yogyakarta Saturday, its spokeswoman saying "Miss World is not welcome in Indonesia at all".
The decision to move the final round was the latest victory for Islamic fringe groups, who are wielding increasing power and have succeeded in getting several events they deem un-Islamic changed or cancelled in recent years.