The rocker was in attendance at country star Travis Tritt's concert at Andiamo Celebrity Showroom in Warren, Michigan on Friday, where he lit the cigar 15 minutes into the show.
Kid Rock's actions upset a 58-year-old asthmatic man who was also in the audience. The man now plans to file a complaint with his local health department over the incident.
The 'Cowboy' singer has since issued an apology, telling TMZ: "My most sincere apologies to the patrons I may have offended, and a big middle finger in advance to all the haters and attorneys who will somehow try to find an easy pay cheque in all this."
However, Kid Rock went on to say that he was too drunk to know better, adding: "I doubt I'm the first one to ever make a bad decision while being intoxicated."
In December, Kid Rock handed out meal gift cards to the underprivileged in hopes of spreading holiday cheer.
He also played a pair of homecoming concerts in Detroit in mid-2011, backed up by Sammy Hagar and his Wabos.
Watch Kid Rock's video for 'Cowboy' below (US only):