A number of wireless racing devices have stopped functioning entirely, while others respond with erratic force-feedback.
"We are aware a limited number of Xbox Live members are experiencing issues with the Xbox 360 Wireless Racing Wheel controller following the recent Xbox Live update," read a statement issued to CVG.
"We are actively working to resolve this as soon as possible and appreciate your patience."
As well as the official Xbox 360 Wireless Racing Wheel, models by Fanatec, Mad Catz and Datel have also seen difficulties.
The Xbox 360 update went live earlier today (June 21), bringing back-end challenges for a full dashboard update later this year.
The autumn update will add several new features, including SmartGlass support and Kinect-enabled adverts.
Watch an advert for Kinect's NUads below: