The incident took place at a party thrown by the Lund University Technology Management student association, a group of about 80 masters students studying economics and technology, TheLocal.se reported Friday.
The incident raised eyebrows, particularly at Lund after students in 2011 staged a mock slave auction that drew international condemnation as being racist.
The students, whose names were not reported, said their intent was not to offend party-goers -- one of whom snapped a picture and sent it to local media -- but to pay tribute to reggae icon Bob Marley.
"We haven't intentionally done something insulting or racist," one of the students said. "But after the fact we've realized that painting our faces black offends some people."
The group's president said it was "unfortunate" that some people misinterpreted the students' painted faces as racist.
"It was an innocent costume party," Elin Wennerstroem, the group's president said.
Other in attendance weren't as forgiving.
Kalle Wigren, who lives near where the party took place, said he saw the incident and was offended.
"When a white person puts black makeup on their face to look like a black person and then proceeds to make fun of the situation, it can't be anything other than racism," he said.