The fixture was suspended after a Dallas United player was accused of using the n-word towards West Ham's Frank Nouble in North Carolina.
Anton Ferdinand, who was playing for the Hammers in the exhibition tournament alongside Carlton Cole and Marlon Harewood, could be heard saying 'I am here to set a precedent' before the English side left the pitch.
During the row, ex-West Ham defender Ferdinand could also be heard threatening to 'punch up' a Dallas United player before leading his Hammers teammates off the pitch.
Ferdinand was involved in a high-profile racism case in 2011 when an independent disciplinary panel found then-Chelsea captain John Terry guilty of racially abusing him during a Premier League match.
A West Ham statement read: "The players made a collective decision to walk off the pitch as a team in support of our player. As a club, everyone at West Ham United stands shoulder to shoulder in solidarity against all forms of discrimination and abuse."
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Dallas United have now left the lucrative seven-a-side tournament after their Friday fixture was cancelled, although it is unclear whether the American side were disqualified or left of their own accord.
TST is a first-of-its-kind tournament with unique formats and 32 teams from across the globe competing for a $1million prize, including Wrexham and Wolves.
Tournament organisers said in a statement: "After conducting an investigation into the final moments of the match between West Ham United and Dallas United, we have concluded that Dallas United violated TST's code of conduct.
"We have been in dialogue with leadership from both clubs and we are all aligned that the best path forward is Dallas United withdrawing from competition.
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"All parties involved are unified in wanting to make a statement against racial insensitivity.
"We seek to run an event that is not only fiercely high stakes for all competitors, but also one in which all competitors feel safe and protected.
"As a result, tomorrow's (Friday) game between Dallas United and Far East United has been cancelled."
Dallas United also launched their own internal investigation but refused to confirm or deny West Ham's allegations.
A club statement read: "In light of the shadow cast by an opposing player's accusation during tonight's match, the Dallas United players unanimously decided to withdraw from the remainder of the competition. Our coaches and staff fully support the team's decision.
"We thank TST7v7 for the opportunity to compete in the tournament."