Stillwater police Capt. Kyle Gibbs said the woman's Hyundai Elantra struck an unoccupied motorcycle of an officer who was working security at the parade, then went into the crowd.
She was taken into custody, and Gibbs said investigators were awaiting the results of blood tests to determine if she was impaired by drugs or alcohol.
Oklahoma University Medical Center and The Children's Hospital announced in a statement Saturday evening that a 2-year-old was the fourth person to die from injuries suffered in the morning crash.
Police said Adacia Chambers, 25, of Stillwater, was arrested on the DUI charge.
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"We treat these like we would any homicide investigation," Gibbs said. "It'll probably take several days to get additional information as to the cause of the accident."
Chambers' father, Floyd Chambers of Oologah, told The Oklahoman newspaper he couldn't believe his daughter was involved and said she was not an alcoholic.
"This is just not who she is. They're going to paint her into a horrible person but this is not (her)," Floyd Chambers told the paper.
A woman who answered a call to a phone number listed for Floyd Chambers told The Associated Press no one was available to talk.
Oklahoma State University President Burns Hargis said there had been discussion about canceling the homecoming game Saturday afternoon against Kansas, but it was played as scheduled.