The placard had been left at Hovde Hall on Monday by protesters upset over the recent discovery of the words "white supremacy" written on a mirror inside the campus' Black Cultural Center.
"Police are investigating the incident as a hate crime since property was altered or destroyed and the conduct was apparently motivated by bias," the university said in a news release.
The office of Dean of Students Danita Brown also was investigating the incident as a violation of the student code of conduct that could result in expulsion, the news release said.
Purdue President Mitch Daniels issued a statement saying "bigotry and hate are neither welcomed nor tolerated at Purdue University."
"There is no place at Purdue for those who act from hatred. If you recognize yourself in this last sentence, you are not welcome at Purdue," Daniels said in an apparent response to a demand by Purdue's Anti-Racism Coalition that he should "articulate a zero-tolerance stance against all racist acts."
More than 200 black, white, Asian and Hispanic students, faculty and staff marched Monday to the steps of Hovde Hall chanting slogans such as "This is what diversity looks like!" and "The people are the power!"
Purdue has said in a statement that the "white supremacy" inscription was not an act of vandalism but was an unintentional transfer of words from a sticky note during an educational seminar.
Nonetheless, organizers of the protest said the incident, whether intentional or not, followed a series of race-related incidents on campus.
FBI statistics rank Purdue second in the nation among public and private universities for the number of reported hate crimes. Those rankings are not objective, however, because reporting of hate crimes by universities is inconsistent.
The demands shouted Monday by the Anti-Racism Coalition also call for doubling the number of minority faculty and students over the next 10 years and requiring an undergraduate course on race and racism.
"All diversity means is difference, unlikeness," Christopher Warren, who instructs courses on African-American studies and sociology at Purdue, said during the protest. "Who cares about diversity when there is no equality?"
Provost Tim Sands watched the demonstration from the sidelines and walked up to the first step of Hovde Hall and addressed the gathering when the crowd called his name.
"We are not an inclusive environment," said Sands. "We have not figured that out yet ... I'm really excited to see this momentum building. I'm sorry it's based on the fact that Purdue is not yet a psychologically safe place to study for many people. It is for some but not for everyone."