The 'Anger Management' star later apologised and blamed it on his lisp, reported TMZ online.
Sheen hosted a splashy opening of his bar at the hip Cabo hotel El Ganzo and guests were having fun until he hurled a homophobic slur at the audience, which included the likes of LA mayor Antonio Villaraigosa and Dr Robert Huizenga from 'The Biggest Loser'.
The 47-year-old was introducing several musical acts at the event this weekend, including Slash, who performed for the crowd.
During the introduction Sheen yelled, "How we doing?" and followed it up with the homophobic slur.
Sheen later apologised, saying, "I meant no ill will and intended to hurt no one and I apologise if I offended anyone. I meant to say maggot but I have a lisp."
