Pearson, son of Foxes boss Nigel, and his two team-mates appeared together in a leaked video from the club's end-of-season 'goodwill tour' of Thailand, during which a variety of crude remarks are made including one of two Thai women being called a "slit-eye".
After an internal investigation Leicester, whose owners Vichai and Aiyawatt Srivaddhanaprabha are from Thailand, have terminated the trio's contracts
A club statement read: "Leicester City Football Club has notified Tom Hopper, Adam Smith and James Pearson that their contracts with the club have been terminated.
"The decision follows the conclusion of an internal investigation and disciplinary proceedings, as a consequence of events that took place during the club's end-of-season goodwill tour of Thailand.
"Leicester City Football Club is acutely aware of its position, and that of its players, as a representative of the city of Leicester, the Premier League, the Football Association and the Club's supporters.
"It is committed to promoting a positive message of community and family values and equality, and to upholding the standards expected of a club with its history, tradition and aspirations.
"The club will make no further comment on the investigation, its finding or outcomes."
Source : PA
Source: PA