The decision came formally as a response to an ongoing controversy about YouTuber Steven Crowder making homophobic and racist comments about a Vox publications writer Carlos Maza, saying things like "lispy queer" and "gay Mexican".
"Our teams spent the last few days conducting an in-depth review of the videos flagged to us, and while we found language that was clearly hurtful, the videos as posted don't violate our policies," TeamYouTube tweeted on Tuesday.
"As an open platform, it's crucial for us to allow everyone - from creators to journalists to late-night TV hosts - to express their opinions within the scope of our policies. Opinions can be deeply offensive, but if they don't violate our policies, they'll remain on our site," it added.
The YouTuber, who describes his YouTube channel as the "number one conservative late night comedy show" has gathered nearly four million subscribers since 2006.
Earlier this week, Crowder claimed that his seemingly derogatory remarks were merely jokes and called them "harmless ribbing".
Currently, YouTube is celebrating LGBT Pride Month by changing its Twitter avatar photos to ones referencing the rainbow flag and also promoting a YouTube-financed original documentary "State of Pride", which Maza has called total hypocrisy.
This is not the first time that Google has been pulled up for its anti-LGBTQ community stand.
In March, US-based LGBTQ civil rights advocacy group Human Rights Campaign (HRC) Foundation suspended Google from its 2019 Corporate Equality Index (CEI) for failing to remove a "conversation therapy" app from its PlayStore.
( With inputs from IANS )