A Melbourne taxi driver has been accused of being racist for refusing to pick up award-winning Indigenous singer Geoffrey Gurrumul Yunupingu.

The blind performer had finished a concert at the Palais Theatre in St Kilda last night and was guided to a taxi waiting at the side stage door.

Mr Yunupingu's manager, Mark Grose, says the driver looked at the singer, said "no", then locked his car and drove off.

"I'm not kidding. I was absolutely gobsmacked," Mr Grose told ABC local radio.

"He refused to take the fare for whatever reason. It's a mystery, but there's only one reason I can think of.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 6 minutes 18 seconds 6 m Mark Grose explains what happened with the taxi Download 2.9 MB

"Well he just looked at the colour of his skin and said 'that's it, I'm not taking him'. There's no other explanation."

Mr Grose says he was doubly shocked when he realised the driver was either Indian or Pakistani.

He says it is not the first time this type of thing has happened.

"Like most Aboriginal people that we've worked with, they've experienced these things before and they're less shocked than we are," he said.

"Every artist that we've worked [with] has experienced racism and you just sit there absolutely heartbroken for them.

"He loves Melbourne and he just takes that sort of stuff in his stride which he shouldn't have to do."

The Victorian Taxi Directorate (VDT) says it will investigate the claims.

Spokesman Steve Bright says it is against the regulations to refuse a fare based on how far a person is going or what sort of person wants a ride.

"They'll get an infringement notice of $300 or so on the first offence and they can have their accreditation removed for repeat offenders," he said.

"When you lodge a complaint, try and get a taxi number or something like that because then we can pin it down and know who's responsible."

He says taxis can only legitimately refuse a fare if the passenger is noisy, violent or they can demonstrate the person cannot pay the fare.