Bristol mayor Marvin Rees says he saw a man give a Nazi salute as he knelt on one knee in memory of George Floyd outside City Hall.
Mr Rees witnessed the man give the salute and shout “Sieg Heil” as he and others took part in the stand for racial equality on Wednesday evening.
He said there was “lingering racism” in the city, adding: “It’s real and it’s raw and it’s still with us now.”
The incident has not been formally reported to Avon and Somerset Police.
The Labour politician recounted the racist incident during a Facebook Live session on Wednesday, the Local Democracy Reporting Service said.
“A guy walked across the grass, two [supermarket] bags in hand, looked at the crowd, saluted the air, and shouted ‘Sieg Heil’.
“[He] then looked at me…I was the only brown fella there, and pointed at me, said my name and then muttered something, which is probably best I didn’t hear.
“That hasn’t happened for a long time.”
Earlier that day, Mr Rees had told BBC 5 live that while societal attitudes have changed since he was a child growing up in Bristol, “structural inequalities” continued to serve up social and economic injustice for black people.
He added there were economic inequalities along race and class lines, where institutions such as journalism, politics and business systematically excluded “black and brown people”.
Bristol has “good leadership” in the police force, he said, but “black and brown people” were more likely to be arrested, more likely to be charged, more likely to be found guilty, and more likely to get a custodial and a longer sentence.
“The biggest predictor of where you end up in life is your parents’ income and their socioeconomic background,” he added.
“These are inequalities that are just stitched into the fabric of British life and we don’t want to feel guilty about it – I’m not about getting emotional about it – what I want to say is let’s face up to and begin dealing with it.”
Protests are planning in Bristol over the weekend to support Black Lives Matter but Mr Rees has said he was concerned about mass gatherings spreading Covid-19.
He urged people to consider finding other ways to express their “passion”, “energy”, “anger” and “desire to see justice done” instead.