"It feels like I've been placed in a category for brown people. That's what it feels like," the 32-year-old told the crowd. She also said comparing singers to rappers was unfair.
Vaughan told the Herald this morning he rejected Aaradhna's claim of racism.
"There's no intention whatsoever that that is the case. The category has existed for some time (and) 'urban' is a description used for radio stations here locally," said Vaughan.
It is the first time a Kiwi artist has turned down a Tui award. When Aaradhna rejected the award, she had already won and accepted the Tui for Best Female Solo Artist.
Aaradhna kept up her protest during her performance of her single Brown Girl later in the night, with the words, '"I'm more than the colour of my skin" splashed next to her across the stage.
During her speech, she also called on officials to include a separate category for R&B and soul singers like herself.
Vaughan said the Urban/Hip-hop category would be re-evaluated before next year's ceremony.
"It's on the list of things we'll look at for next year," he said. "We were thinking about it, the awards evolve ... I can't do anything until the next awards.
"It's definitely a conversation for what we do in 2017."
Vaughan said he had already had the discussion with Aaradhna's manager when she was nominated for the category. "We sat down and had a chat about it. We both agreed we'd have a look at it."
Despite the unprecidented protest, Vaughan said he didn't have a problem with Aaradhan's refusal to accept her award.
"I thought it was a great speech. I wasn't unhappy with the moment. It was perfectly fine."
Asked if it might have been a publicity stunt, Vaughan said he wasn't "taking it like that at all".
Aaradhna's manager hasn't yet responded to a request for comment.
