In his apology on Twitter, the four-time world champion said the Instagram video was a “lapse of judgment.”
Hamilton’s video showed his nephew in a purple and pink princess dress and waving a pink-hearted shaped wand. After his nephew replies yes, Hamilton says: “Why did you ask for a princess dress for Christmas?”
The F1 driver then adds: “Boys don’t wear princess dresses,” before his nephews covers his ears with his hands.
Hamilton later deleted the video, and apologized.
“Yesterday I was playing around with my nephew and realized that my words were inappropriate so I removed the post,” the 32-year-old Mercedes driver wrote on Twitter.
“I meant no harm and did not mean to offend anyone at all. I love that my nephew feels free to express himself as we all should,” added Hamilton, who has 5.7 million followers on Instagram.
“My deepest apologies for my behavior as I realize it is really not acceptable for anyone, no matter where you are from, to marginalize or stereotype anyone.”
“Personally find it far more reassuring to see little boys in princess dresses than little girls in them,” tweeted Smith.
However, other Twitter users said the reaction to Hamilton’s Instagram post was overblown.
“Plus his nephew seemed to giggle at his response. You guys are more upset than the kid was. Enjoy the holidays and stop complaining about EVERYTHING. Peace and love.”
Hamilton and rival Sebastian Vettel were tightly matched for much of 2017, with the Ferrari driver holding the upper hand for the first half of the season before the Briton unleashed a blistering run of form, winning five times in six races to turn a 14-point deficit into a 66-point lead in the space of eight weeks.
It’s not the first time that Hamilton’s active social media usage has got him into trouble.
He’s taken selfies while riding a Harley-Davidison motorbike in New Zealand and said on Snapchat “This s**t is killing me” during a F1 media press conference in Japan in October 2016.