The 30-year-old rapper, best known for songs like "Thrift Shop" and the same-sex marriage anthem "Same Love," stepped onstage wearing a large prosthetic nose, silk suit shirt and bushy black beard.
Many observers, including actor Seth Rogen, saw Macklemore's costume as an offensive caricature of a Jewish person.
"A fake witches nose, wig, and beard = random costume. Not my idea of a stereotype of anybody," he tweeted.
"Really?? Because if I told someone to put together an anti Semitic Jew costume, they'd have that exact shopping list," Rogen hit back.
Macklemore issued a lengthier statement via his website on Monday, claiming that his costume was "misunderstood."
The rapper said he picked up items that would best allow him to disguise himself.
"I personally thought I looked very ambiguous in terms of any 'type' of person. Some people there thought I looked like Ringo, some Abe Lincoln. If anything I thought I looked like Humpty Hump with a bowl cut," Macklemore said. "The character I dressed up as on Friday had no intended cultural identity or background. I wasn't attempting to mimic any culture, nor resemble one. A 'Jewish stereotype' never crossed my mind."
"I would never intentionally put down anybody for the fabric that makes them who they are. I love human beings, love originality, and... happen to love a weird outfit from time to time," he added.