(CNN)Red Bull Racing has terminated the contract of junior driver Juri Vips after an investigation into his alleged use of a racist slur during a live gaming stream.
"Following its investigation into an online incident involving Juri Vips, Oracle Red Bull Racing has terminated Juri's contract as its test & reserve driver," the statement said.
"The team do not condone any form of racism."
The 21-year-old Estonian was relieved of all team duties on June 21. CNN has reached out to Vips for comment.
After the incident, Vips apologized and admitted the language used was "entirely unacceptable" in a post on his personal Instagram account.
"I wish to unreservedly apologize for the offensive language used during a live gaming stream earlier today," Vips wrote.
"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."
Earlier this year, he replaced Sergio Pérez to drive Red Bull's F1 car in a practice session ahead of the Spanish Grand Prix.
Vips has been racing with the British-based Hitech GP team in Formula 2 this season and currently sits seventh in the standings, although his future with the team is unclear.
CNN has reached out to Hitech GP for comment.
It comes as the sport continues to condemn former F1 driver Nelson Piquet for using a racial slur against British driver Lewis Hamilton.
Piquet used a Brazilian Portuguese racial slur to describe seven-time champion Hamilton when addressing a high-speed collision involving Hamilton and Max Verstappen during the Silverstone Grand Prix last year.
The racist term was used by the three-time F1 world champion in November of last year, but only came to light recently, when the interview was released Monday.
On Tuesday, Hamilton responded to Piquet's comments in a series of posts on Twitter, writing "Vamos focar em mudar a mentalidade" -- Portuguese for "Let's focus on changing the mindset."