The new £88million signing, 22, repeated the toxic racial term in TikTok footage which has been viewed nearly 214,000 times.
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Sources close to the Ukrainian winger, insist he was just trying to recite lyrics from US rapper Lil Baby’s 2017 hit Freestyle.
Premier League new boy Mykhailo Mudryk has made a grovelling apology for the video.
But fans and campaigners blasted the Ukrainian winger, 22, for using the language in the TikTok clip “irrespective of context”.
Mudryk’s representative told The Sun: “Mykhailo is deeply sorry for any offence caused by the video posted on his TikTok account last July.
“Whilst his intention was solely to recite lyrics of a song, Mykhailo regrets his decision and wholeheartedly accepts it was not appropriate. The video has since been removed.”
“The video has since been removed.”
Leading football anti-racism group Kick It Out blasted: “Kick It Out condemns the use of all racial slurs, including the N-word irrespective of context.
“The N-word is deeply offensive and the use of this term by high-profile figures in football can only serve to alienate people from the game.
“It is important that footballers use their significant platform in a positive way, and we’re encouraged to see that Mykhailo Mudryk has acknowledged the hurt caused by his use of this offensive slur.”
Mudryk made his mega-money move to the Blues this month from Shakhtar Donetsk in his war-torn homeland.
But last July, he appeared alongside a pal in front of an Audi sports car for the 40-second TikTok clip.
With hands on their chests, the pair are seen repeating a line from Lil Baby’s 2017 hit Freestyle.
The full track, lasting two minutes and 43 seconds, features the N-word 16 times.
Black artists have blasted people of white heritage for using the term in the past.
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Singer Kendrick Lamar declared in 2018: “I’ve been on this earth for 30 years and there’ve been so many things a Caucasian person said I couldn’t do.”
He added: “So if I say this is my word, let me have this one word, please let me have that word.”
Grime artist Yizzy has said: “If you use the word . . . and you’re not of any black heritage, in this modern day world, be prepared to face a backlash.”
And Public Enemy rapper Chuck D has called for all artists to stop using the N-word in their music, highlighting “double standards” in the industry.
Labour MP David Lammy said it was “probably the most offensive word” in the English language.
Kick It Out said it works closely with clubs and players to “educate those involved in the game about the importance of being inclusive”.
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