Kyle Larson, driver of the #42 Credit One Bank Chevrolet, is introduced prior to the Monster Energy NASCAR Cup Series FireKeepers Casino 400 at Michigan International Speedway on June 10, 2018 in Brooklyn, Michigan. Photo: VCG

NASCAR has suspended Kyle Larson indefinitely and ordered him to attend sensitivity training after he used a racial slur during a livestream broadcast of an iRacing esports event.

"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.

NASCAR had put on the event to fill the void left in the racing calendar due to the unprecedented shutdown of global sport because of the coronavirus pandemic.

Larson could be heard using the slur while he was apparently testing his microphone for the competition.

"Kyle, you're talking to everyone, bud," one driver replied.

A second voice on the stream said, "No way did that just happen."

Shortly after NASCAR announced his suspension, Larson said there was "no excuse" for his actions in a video posted on Twitter.

"I just want to say I'm sorry - last night I made a mistake and said the word that should never, ever be said," said the 27-year-old American.

"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."

His use of the slur sparked outcry across social media and Larson was also suspended without pay from his team, Chip Ganassi Racing, a powerhouse in the pro auto-racing world.

"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," Chip Ganassi Racing said in a statement.

Larson's sponsors wasted no time in distancing themselves from the driver.

"We were extremely disappointed and appalled to hear about this incident," said McDonald's in a statement.

"The comments made by Kyle Larson are insensitive, offensive and not reflective of our inclusive values and will not be tolerated. McDonald's is taking immediate action to terminate the relationship with Larson."

Credit One Bank also ended their relationship, expressing the same disappointment.

"As stated earlier, Credit One Bank denounces the highly offensive language used by Kyle Larson during Sunday's iRacing event," said Credit One Bank in a statement.

"In addition to the quick actions taken by NASCAR and Chip Ganassi Racing, Credit One Bank is terminating its sponsorship of Kyle Larson."