The funnyman, best known for working with late legend Richard Pryor, made an appearance on the programme but left fans aghast during a rambling 14-minute performance, according to Tmz.com.
At one point, he singled out a black audience member and called him a "bald-headed n**ga".
According to the website, Hall had to interrupt the routine and bring it to an end.
One member of the audience, Jonathan Slocumb, tweeted: "Omg (oh my God)! I just witnessed The Most Embarassing (sic), Disrespectful "standup" Bombing ever by Paul Mooney @arseniohall I wanted to walk out! (sic)"
After the show aired with an edited version later on Monday, the tweeter added: "Theee Best Editing On Television! @arseniohall Because I was in the audience and what y'all saw was Exceptional Clean Up. Paul Mooney was deplorable and the highest level of disgusting. Be very blessed that you didn't see the unedited version."
Hall and Mooney have yet to comment on the reports.
The Dead's last ever shows will be available online for a fee.
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