Motor sport's governing body confirmed that it was probing Artem Severiukhin's "unacceptable conduct".
A young Russian karting driver is under investigation after giving a Nazi-style salute on a race podium.
Artem Severiukhin -- who is competing under an Italian flag -- was filmed hitting his chest before extending his raised right arm and then laughing after an event on Sunday.
The incident occurred as the Italian national anthem was being played after Severiukhin won a European Championship race in southern Portugal.
Motor sports' governing body FIA confirmed in a statement that it had launched an "immediate investigation" into the karter's "unacceptable conduct".
The Paris-based organisation said it would “communicate shortly on the further steps that will be taken in this case.”
Following Russia's invasion of Ukraine, the FIA banned Russian drivers from competing under their country's flag.
Severiukhin apologised for the incident in a video on Instagram and denied that it was a "Nazi salute".
"I have never supported Nazism and I consider it one of the most terrible crimes against humanity," he said.
"I know it's my fault, I know I'm stupid, and I'm ready to be punished ... but please understand that I did not support Nazism or fascism with this gesture."
Ward Racing said it was "deeply in shame" and condemned Severiukhin's behaviour in the "strongest possible terms".
The privately-owned Swedish team confirmed that it would move to terminate the driver's racing contract.
"The actions of Artem Severiukhin during the award ceremony ... were exclusively individual and do not represent the views and values of Ward Racing in any manner," a statement on Facebook read.
"On the contrary, Ward Racing stands with the international community condemning Russia's invasion of Ukraine and expresses its solidarity with the people suffering because of this unprovoked and horrific attack."
"Ward Racing sees no possibility for continued cooperation with Artem Severiukhin and will proceed with terminating his racing contract."
The Russian Automobile Federation also said in a statement that it was aware of the incident and was investigating.
"We consider as unacceptable any, even accidental, manifestation of fascism and nazism in Russian motorsport and Russian athletes."