In a video clip available online since Sunday the 27-year-old Swede, whose real name is Felix Kjellberg, can be heard using the N-word in an expletive-laden tirade at his opponent.
In a new YouTube video posted Tuesday that was viewed more than 450,000 times within three hours, Kjellberg said he was "sorry".
"It was something that I said in the heat of the moment. I said the worst word I could possibly think of and it just sort of slipped out," he admitted.
"I'm not going to make any excuses as to why it did, because there are no excuses for it."
PewDiePie is known for posting humorous clips and playing livestreamed video games for his more than 57 million followers on YouTube, making him the site's most watched blogger.
It is not the first time Kjellberg has been at the centre of controversy. In February he lost contracts with Youtube and Disney over anti-Semitic comments, and he was temporarily blocked from Twitter in September 2016 after joking he had joined the Islamic State group.
"I'm disappointed in myself because it seems like I've learned nothing from all these past controversies," Kjellberg said.
"I'm just an idiot, but that doesn't make what I said or how I said it okay. It was not okay," he added.
"I'm really sorry if I offended, hurt or disappointed anyone with all of this".
Following the tirade, one game developer said he was going to file a complaint to prevent the Swede from playing his games online.
"He's worse than a closeted racist: he's a propagator of despicable garbage that does real damage to the culture around this industry," developer Sean Vanaman tweeted.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)