Kyle Larson was suspended indefinitely by NASCAR on Monday for using a racial slur on a livestream during a virtual race. Chip Ganassi Racing also suspended Larson without pay.
The star driver said there was "no excuse" for his comment and apologized in a video posted on his social media accounts.
"I made a mistake and said the word that should never, ever be said," Larson said. "There is no excuse for that. I wasn't raised that way. It's just an awful thing to say. I feel very sorry for my family, my friends, my partners, the NASCAR community and especially the African American community.
"I understand the damage is probably unrepairable and I own up to that. But I just want to let you all know how sorry I am and I hope everybody is staying safe during these crazy times."
NASCAR ordered Larson to complete a sensitivity training course before he's eligible for reinstatement.
"NASCAR has made diversity and inclusion a priority and will not tolerate the type of language used by Kyle Larson during Sunday's iRacing event," NASCAR said in a statement. "Our Member Conduct Guidelines are clear in this regard, and we will enforce these guidelines to maintain an inclusive environment for our entire industry and fan base."
Larson also was suspended indefinitely by iRacing.
"iRacing considers itself to be a welcome and inclusive community for racing enthusiasts all around the world. We have strict policies against offensive behavior and language. Kyle Larson's language last night during a streamed online race was both offensive and inappropriate, and in violation of our sporting code. As such, Kyle Larson has been suspended indefinitely from the iRacing service," it said in a statement.
Larson was competing in an iRacing event Sunday night when he appeared to lose communication with his spotter on his headset. During a check of his microphone, Larson said, "You can't hear me?" That was followed by the N-word.
"We are extremely disappointed by what Kyle said last night during an iRacing Event. The words that he chose to use are offensive and unacceptable. As of this moment we are suspending Kyle without pay while we work through this situation with all appropriate parties," Ganassi Racing said in a statement.
One week earlier, Bubba Wallace "rage quit" an official NASCAR iRacing event televised live nationally, and his sponsor fired him immediately. Wallace had been wrecked, and, fed up, quit the game. He admitted on Twitter that it was out of anger. Blue-Emu, a topical pain reliever that had sponsored Wallace for the virtual race and has an association with him for NASCAR races, replied to the tweet by firing Wallace.
There were ramifications from Larson's sponsors. McDonalds, Credit One Bank and Fiserv, a financial services technology company that runs the Clover platform that had sponsored him, terminated their sponsorship deals with Larson, and Chevrolet suspended its personal services relationship with him.
"We were extremely disappointed and appalled to hear about this incident,'' McDonald's USA said in a statement. "The comments made by Kyle Larson are insensitive, offensive and not reflective of our inclusive values and will not be tolerated.''
NASCAR in 2013 suspended Xfinity Series driver Jeremy Clements for using the same word Larson used while Clements was speaking to a reporter. Clements was reinstated after completing a sensitivity training course and still competes.
Larson is half-Japanese -- his grandparents spent time in an internment camp in California during World War II -- and he climbed from short-track racing into NASCAR through its "Drive for Diversity" program. He is the only driver of Japanese descent to win a major NASCAR race.
Larson, in his seventh full season racing at NASCAR's top Cup level, is in the final year of his contract with Chip Ganassi Racing. He was at the top of the list of a crowded free-agent field when the circuit was suspended four races into the season because of the coronavirus pandemic.
NASCAR quickly pivoted to create an iRacing league of virtual racing that has engaged viewers and set records for esports television viewership. One of the draws of the platform is that drivers can link into one another on a livestream, where they banter, argue, make jokes and discuss the racing. Fans can listen through the gaming app Twitch.
Larson used the slur during the Sunday night race against drivers from various series. The event was not part of NASCAR's official series.
Drivers in the chat immediately reacted to Larson's use of the slur, with one instantly alerting him, "Kyle, you're talking to everyone, bud." Others were in disbelief.
Larson, 27, has six career Cup wins and finished a career-best sixth in the standings last season.
He is considered one of the top sprint car racers in the country and in January finally won the prestigious Chili Bowl after 13 attempts. He was criticized by NASCAR fans after the Chili Bowl win for calling it the biggest of his career -- just weeks before the season-opening Daytona 500, where he is 0-for-7.
"I'm sorry NASCAR, I'm sorry Daytona, but this is the biggest [expletive] race I've ever won," Larson said after exiting his winning Chili Bowl car. "I hope to win Daytona in a few weeks but this is bad [expletive]."
Larson later apologized for downplaying the significance of his NASCAR wins. His victories in Cup have come at California; Dover, Delaware; Michigan (three victories); and Richmond, Virginia. He won NASCAR's non-points All-Star race last season.
The Associated Press contributed to this report.