The spot depicts a badly battered woman on crutches being pressed by police to pick a suspect out of a lineup of five black males and a goat named Felicia.
The actors are members of alternative hip-hop collective Odd Future Wolf Gang Kill Them All, co-founded by rapper-record producer Tyler, The Creator.
Tyler plays the voice of Felicia.
In the criticized commercial -- one in a series of spots about the Mountain Dew-crazed goat -- Felicia, in Tyler's voice, taunts the battered woman with phrases like "snitches get stitches, fool," "keep your mouth shut" and "I'm going to get out of here and do you up."
Social commentator Boyce Watkins of Syracuse University wrote on the Your Black World website the spot was "arguably the most racist commercial in history."
A PepsiCo spokesperson emailed advertising trade publication Adweek.
"We understand how this video could be perceived by some as offensive, and we apologize to those who were offended," the email said. "We have removed the video from all Mountain Dew channels and have been informed that Tyler is removing it from his channels as well."