The beauty, who had to fight for her post after making anti-gay marriage remarks at the Miss USA pageant and following the release of topless shots online, will hand over the state title to Tami Farrell on Wednesday afternoon, according to TMZ.com.
Sources connected with the pageant, which is owned by property tycoon Donald Trump, claim Prejean has upset her handlers by violating her contract and ignoring rules to get clearance for non-pageant activities and appearances.
Prejean has also refused to show up for appearances she's contractually obliged to make.
Confirming the news, Trump says, "To me, she was the sweetest thing. Everyone else, she treated like s**t."
(c) 2009 WORLD ENTERTAINMENT NEWS NETWORK LTD. All global rights reserved. No unauthorized copying or re-distributing permitted.