Miami Heat forward Meyers Leonard has been fined $50,000 (£36,000) after using an anti-Semitic slur during an online game stream.
Leonard, 29, has also been banned from all Heat facilities and team activities for a week.
The comment was made during a Call of Duty game on Twitch on Monday.
“He said something that was extremely distasteful and hurtful and we’re left with the aftermath of that,” said Heat coach Erik Spoelstra.
In a statement, NBA commissioner Adam Silver said Leonard’s comments were “inexcusable”, while adding that he will be required to attend a “cultural diversity” programme.
Leonard apologised for using the slur in an Instagram statement on Tuesday and said he had not known what the word meant when he used it.
“It doesn’t matter the intent. It’s not right,” added Spoelstra, who said he spoke to Leonard after reading his apology.
Heat captain Udonis Haslem said: “We can’t tolerate that here. Right is right, and wrong is wrong. And since I’ve been here in this organisation, to the day I leave this organisation and beyond, we’re going to try to be on the right side of everything – especially issues like this.”
The former Portland Trail Blazers player is out for the rest of the season after shoulder surgery last month.
He is known to be an avid online gamer and has tens of thousands of followers on the Twitch platform.
E-sports organisation FaZe Clan said it was “cutting ties” with him on Tuesday and a number of other gaming companies, including Astro Gaming and Origin PC, have also severed their relationships.
