The 31-year-old star sang her mega-hit Flowers at this year's ceremony, where she also picked up two awards, but she admitted she had been hesitant about accepting the offer to sing before a "tough conversation" with her famous godmother.
"A tough conversation I had with her: I told her, 'I'm wondering if I'm going to do the Grammys or not'," Cyrus said during an appearance on My Next Guest Needs No Introduction with David Letterman.
"And she said, 'Well of course you're going to do the Grammys, and you're not just going to show up but you're going to show off, and you're going to be everything that you are sitting right here in front of me'."
The 9 to 5 singer urged Cyrus to get on stage with her "armour" and to be herself.
Dolly Parton played Miley Cyrus's godmother in the television series Hannah Montana. (AP PHOTO)
"And she said, 'And don't forget about the beauty - the hair, the make-up, the whole show - it's armour for us'," Cyrus said.
"She's always said this to me: 'You do you, and I'll do me, and together we'll be us'.
"So she wasn't telling me to be Dolly, she wasn't telling me to be fabulous and hide behind the sparkles and the hair - she was telling me to be me."
Parton, 78, also played Cyrus's godmother in the television series Hannah Montana and the Nothing Breaks Like a Heart singer recalled how she "didn't really know the difference" between herself and her small-screen alter ego as a teenager.
"Parts of me are that character, including a little bit of my relationship with Dolly," she said.
Cyrus drew comparisons between her character and the country great.
"I mean, Hannah Montana is famous for wearing a blonde wig and kind of having this other persona that she can turn off and be a regular girl by day and have this superstar life at night, and I realise that's something that Dolly has been doing pretty much her entire life," Cyrus said.
"Now, she's always in the wig and she's always in the Dolly.
"It's not about the external performance of her creating the character."
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