Jenna Talackova, 23, was born male, leading organizers to disqualify her last month as a finalist in the 61st Miss Universe Canada pageant in May.
The rules of the contest run by Donald Trump's New York City-based organization say entrants must be "naturally born" females. The Vancouver woman underwent a sex change four years ago.
But shortly after Talackova announced a news conference in Los Angeles with high-profile lawyer Gloria Allred for Tuesday, the New York-based Miss Universe Organization said in a statement on the Miss Universe Canada website that Talackova can compete "provided she meets the legal gender recognition requirements of Canada, and the standards established by other international competitions."
The statement did not elaborate and messages seeking clarification from Miss Universe organizers were not immediately returned.
Allred's office said its news conference is still proceeding as planned and that Allred would not comment on Monday night.
The disqualification won Talackova widespread sympathy and raised the question of whether the pageant has the right to decide who is female.
Her change of gender was hardly a secret before the event because she had competed in the 2010 Tiffany Miss International Queen Competition for transgendered and transsexual women in Pattaya, Thailand. In a video interview for that pageant, she said she had lived her life as a female since age 4, began hormone therapy at 14 and changed sex at 19.
"I regard myself as a woman with a history," she said.
Connie McNaughton, Miss World Canada in 1984 and first runner-up for the world crown, had called the decision outdated and discriminatory. Professor Patrizia Gentile of Ottawa's Carleton University, who did a dissertation on beauty pageants, equated the ban with the exclusion of blacks and Jews from pageants in earlier times.
From the conservative side of Canadian society, Gwen Landolt, national vice president of REAL Women of Canada, said the pageant was simply being realistic in barring Talackova.