According to the outlet, the country music star's neighbor recorded footage of Wallen, 27, and his friends returning home during the early hours of Sunday. In the video, a man purported to be Wallen is heard using a racial slur, among other expletives, while speaking to others in the group.
TMZ reports that noise concerns prompted neighbors to document the incident on camera.
E! News has not verified the authenticity of the video. The Nashville-based singer did, however, acknowledge his actions in a statement provided to TMZ.
"I'm embarrassed and sorry," he said. "I used an unacceptable and inappropriate racial slur that I wish I could take back. There are no excuses to use this type of language, ever. I want to sincerely apologize for using the word. I promise to do better."
This isn't the first time Wallen's been on the receiving end of criticism. Last October, "Saturday Night Live" scrapped his scheduled performance after he broke COVID-19 safety protocols by partying at the University of Alabama.
At the time, Wallen admitted he had "some growing up to do."
"I think I've lost myself a little bit," his apology statement read in part. "I've tried to find joy in the wrong places. I don't know. It's left me with less joy, so I'm going to go try to work on that. I'm going to take a step back from the spotlight for a little while and go work on myself."
Wallen was ultimately invited back to "SNL," where he made light of the debacle in a sketch about his party lifestyle.
In May 2020, he was arrested and charged with public intoxication and disorderly conduct in Nashville. The charges were reportedly dropped.
E! News reached out to Wallen's team for comment.