The publisher said it had removed the book from its websites, stopped any fulfillment orders, and sought a return of all inventory, adding it would take steps to inform all schools and libraries why it was being withdrawn.
"Throughout our 100 year history, we have learned that trust must be won every day by total vigilance," it added. "It is our duty and privilege to publish books with powerful and positive representations of our diverse society, and we will continue to strengthen our review processes as we seek to support all young readers."
The book — stylized as a graphic novel penned by the protagonists of the original Captain Underpants series, George Beard and Harold Hutchins — follows two cave-kids named Ook and Gluk who travel to the future and learn Kung-Fu from martial arts instructor Master Derrick Wong.
It spent 33 weeks on theNew York Times hardcover graphic novel best-sellers list after its release, six of them at the top.
In a statement of his own, author Pilkey apologized for the passive racism, which he said had only recently been brought to his attention.
"About ten years ago I created a book about a group of friends who save the world using Kung Fu and the principles found in Chinese philosophy," he said. "The Adventures of Ook and Gluk: Kung-Fu Cavemen from the Future was intended to showcase diversity, equality, and non-violent conflict resolution."
"But this week it was brought to my attention that this book also contains harmful racial stereotypes and passively racist imagery."
"I wanted to take this opportunity to publicly apologize for this. It was and is wrong and harmful to my Asian readers, friends, and family, and to all Asian people," he said, adding the publisher had stepped forward to share responsibility.
"I hope that you, my readers, will forgive me, and learn from my mistake that even unintentional and passive stereotypes and racism are harmful to everyone. I apologize, and I pledge to do better."
He concluded by saying he and his wife were donating all of his advance and royalties from the book to charities, including one that promoted more diversity in children's books, and another that combatted hatred against Asians.
The move comes just weeks after six Dr Seuss books were pulled over illustrations and descriptions deemed racist.