Kyrgios, who claimed he was provoked by the Swiss veteran during an on-court interview, said to Wawrinka: "(Thanasi) Kokkinakis banged your girlfriend (WTA player Donna Vekic), sorry to tell you that, mate.”
An angry Wawrinka, who retired in the third set citing a back injury, reportedly fronted Kyrgios in the dressing room after the match.
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He then demanded the ATP take action over the ‘disrespectful’ and ‘unacceptable’ comments in an angry Twitter tirade.
The governing body obliged, confirming they will fine Kyrgios who publicly expressed his regret over the crude slur via Facebook.
"My comments were made in the heat of the moment and were unacceptable on many levels,” Kyrgios said.
"In addition to the private apology I've made, I would like to make a public apology as well.
"I take full responsibility for my actions and regret what happened."
The Australian faces a fine of up to $10,000US for verbal abuse and unsportsmanlike conduct.
Krygios’ actions have been widely condemned both by the tennis fraternity and casual sports fans.
The incident is the latest in a growing list of indiscretions by the talented but brash 20-year-old.
He called an umpire dirty scum at Wimbledon and was later accused of tanking in his loss to Frenchman Richard Gasguet.
Kyrgios’ temperament was called into further question when he said, ‘I don’t want to be here’ during a recent David Cup clash.