A Nascar driver is out of a job following his use of a racial slur during a virtual race Sunday.

Kyle Larson has been put on an indefinite suspension from the organisation and was fired from his team after using the N-word on a live-streamed virtual race on Sunday.

Chip Ganassi Racing terminated Mr Larson on Monday.

The incident occurred while Mr Larson was participating in an iRacing race simulator livestream on Twitch. He believed he'd lost communication with his team and called out for them using the slur.

"You can't hear me," he said. "Hey (slur)."

Mr Larson apologised for using the word on Monday.

"I just want to say I am sorry," he said. "I made a mistake and said a word that never, ever should be said. There's no excuse for that. I wasn't raised that way. It's just an awful thing to say and I feel very sorry to my friends, my family, the NASCAR community and especially the African American community. I understand the damage is unrepairable. I wanted to let you all know how sorry I am and I hope everyone is staying safe during these crazy times."

The "damage" Mr Larson referred to was not only his firing, but also the loss of several of his sponsors.

McDonald's, Credit One Bank and Clover terminated their sponsorship of him following the incident.

His race team issued a statement announcing his firing on Monday.