A university rugby club invited its players to take part in a ‘bring a Jew' night and told them to find female Jewish students as dates.
Members of Oxford University's men's under-21 side were encouraged to ‘dress up as Jews' and carry money bags.
The event, due to take place on Wednesday, was cancelled after complaints from Jewish students, but it is thought some players went ahead with the night out as planned.
Officials from the university and student union had told organisers to cancel the social and are now investigating.
The team were due to begin their night out at a bar before moving to a nightclub in the town.
Sports clubs at the university traditionally take part in ‘crew date' social events. Players are allowed to invite friends from other sports or university societies and choose a fancy dress theme.
An Oxford University spokeswoman said "inappropriate and unacceptable behaviour by two or three students" was under investigation.
"We cannot comment directly on the case as we have yet to establish the facts. However, the University condemns unreservedly racial stereotyping," she said.
"The University reaffirms its commitment to promoting good race relations and condemns any form of religious discrimination."
A Union of Jewish Students spokesman said: "The actions of a few individuals have caused real offence to Jewish students on campus. UJS is appalled that in 2008 old myths and antisemitic stereotypes are still appearing among supposedly educated students.
"It is clear that this is only an ignorant minority. The student movement in Britain has made great strides to tackle antisemitism but incidents like this remain a stain on the reputation of universities."
Anna Harwood, joint chair of the university's Jewish Society, said: "If the event had gone ahead it would have been offensive and we would have been upset.
"But the university has been very helpful, as has the student union. They liaised almost immediately with our student rabbi."