The Estonian appeared to use the n-word whilst on a Twitch stream with fellow Red Bull junior Liam Lawson.
The Milton Keynes squad released a statement confirming his suspension with an investigation into the incident pending.
“Red Bull Racing has suspended junior driver Juri Vips from all team duties with immediate effect, pending a full investigation into the incident,” it read.
“As an organisation we condemn abuse of any kind and have a zero-tolerance policy to racist language or behaviour within our organisation.”
Vips himself released a statement via his Instagram profile.
“I wish to unreservedly apologise for the offensive language used during a live gaming stream earlier today,” his post said.
“This language is entirely unacceptable and does not portray the values and principles that I hold.
“I deeply regret my actions and this is not the example I wish to set. I will cooperate with the investigation fully.”
A Red Bull junior driver since 2018, Vips is currently in his third season of F2, currently driving for Hitech.
The Estonian has had an eventful year on track – he crashed out of the race whilst leading in Baku, after also spinning off in the Imola feature race after taking pole. He is currently seventh in the championship.
As junior driver for Red Bull, Vips made his F1 race weekend bow at the Spanish GP, participating in a free practice session as part of the championship’s young driver stipulation.
His next scheduled F2 race is at Silverstone during the British GP event next weekend.