Russian prosecutors are even considering whether to open a criminal case in the matter, which comes amid a rise in US-Russian tensions.
Videos posted online of Wednesday's concert in the Ukrainian city of Odessa show bass player Jared Hasselhoff pushing the Russian white, blue and red flag down the front of his pants and pulling it out the back. He then shouted to the audience: "Don't tell Putin", a reference to Russian President Vladimir Putin.
The incident outraged the Russian government. Maria Minina, a spokeswoman for the weeklong Kubana festival in southern Russia, Saturday said the band's headlining performance the previous evening had been cancelled because of its treatment of the flag.
The American band is known for its sexually explicit songs, including The Bad Touch, with its unforgettable lyrics: "You and me, baby, ain't nothin' but mammals, so let's do it like they do on the Discovery Channel."
Russian Culture Minister Vladimir Medinsky tweeted Friday night that he had spoken with officials in the southern Krasnodar region, known as Kuban. "Bloodhound Gang is packing its bags," he said in the Twitter post. "These idiots will not perform in Kuban."
Hasselhoff was questioned Saturday by police, according to Russian Interior Ministry, which said prosecutors have been asked to decide if he could be charged with defaming the Russian flag.
The bass player apologized late Friday at a news conference in Anapa, the local Yuga.ru news portal reported. He was quoted saying he had meant no offence and explaining that it was a band tradition for everything thrown from the stage first to be passed through his pants. Hasselhoff said he decided to throw the flag as some fans had seemed disturbed to see it hanging on the stage.