Oh dear — It appears Carrie Prejean had a very good reason from dropping her multimillion dollar lawsuit against Miss California USA; the emergence of her very own homemade sex tape!

The 22-year-old stunner — who set off a national debate after she used her Christian background to publicy denounce gay marriage during the 2009 Miss USA pageant — is reportedly featured in a “racy” and “graphic” skin flick that threatens to shatter her image as a moral crusader.

According to TMZ.com, the beauty queen only demurred on the suit after organizers threatened to release the sex tape. “Prejean demanded more than a million dollars during her settlement negotiations with Miss California USA Pageant officials — that is, until the lawyer for the Pageant showed Carrie an XXX home video of her handiwork…..”

A joint statement released Tuesday says Prejean and the organizers of the pageant reached a confidential settlement on dueling lawsuits.