A 30-second television ad featuring Ludacris has been pulled and Pepsi has apologised for offending anyone through its association with the rapper.
Controversy comes as Pepsi signs up nu-metal band Papa Roach and the rap act Sev to appear in two television ads for its Pepsi Blue berry-flavoured drink. The ads will feature the artists' music and end with the line "It's the mix", and were made simultaneously with the videos for the songs.
US cable television presenter and right-wing columnist Bill O'Reilly had called Pepsi "immoral" for using Ludacris in its advertising. "I'm calling for all responsible Americans to fight back and punish Pepsi for using a man who degrades women, who encourages substance abuse, and does all things that hurt particularly the poor in our society," he said.
The rapper's lyrics include lines such as "You think it's all practical jokes and big bloopers/But I smack bitches with no titties that work at Hooters", taken from his album 'Word of Mouf'.
The controversy echoes that of the soft-drink maker's run-in with Madonna, who was dropped from Pepsi's advertising after her 'Like a Prayer' video caused a furore among US religious groups in 1989. Madonna received $5m for her work for Pepsi.
Pepsi has had more successful collaborations with clean-cut artists like Britney Spears and Shakira, although Spears has been spotted on more than one occasion drinking rival cola brand Coke, not to mention recent admissions that she smokes and has had sex.
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