Nikki Haley, the Indian American woman running for South Carolina's governor seat, was attacked with racial slur by a state lawmaker who called her a "raghead".
Republican state Senator Jake Knotts also attacked President Barack Obama in comments on an internet political show called Pub Politics.
Haley, who was born a Sikh and describes herself as a Methodist, became target of racial slur typically used against Arabs or other ethnic groups thatwear turbans or headdresses.
"We already got one raghead in the White House," Knotts said. "We don’t need another in the Governor’s Mansion," he was quoted as saying by The State, a South Carolina newspaper.
Knotts reportedly also talked at length about Haley’s parents’ religion and her family.
Haley campaign manager Tim Pearson said Knotts was an embarrassment to the state, and that South Carolina voters would make it clear on Tuesday they are better than this.
Knotts now insists that his comments were made in zest and also agreed to apologize.
"My 'raghead' comments about Obama and Haley were intended in jest," he said.
"Bear in mind that this is a freewheeling, anything-goes Internet radio show that is broadcast from a pub. It's like local political version of 'Saturday Night Live'", he said in a statement.
“Since my intended humorous context was lost in translation, I apologize. I still believe Ms. Haley is pretending to be someone she is not, much as Obama did, but I apologise to both for an unintended slur," the Republican politician added.
The show's host, Wesley Donehue, told the newspaper: "I, along with everyone else at the table, was shocked."
Republican Haley currently serves in the South Carolina House of Representatives where she represents Lexington County, and is the first Indian-American to hold office in that state.
Haley's religion was also raised as an issue during her first South Carolina House run in 2004, when anonymous fliers claimed that she was a Hindu, which is incorrect.
The daughter of a Sikh Punjabi immigrants faced more trouble this week, as a political lobbyist claimed that he had a tryst with the Republican candidate, who is already facing allegations of an extra-marital affair.