University president Vianne Timmons apologized on the weekend after a photo of team members dressed in cowboys and Indians costumes circulated on social media.
Timmons says the team's members and coaches will be required to discuss the matter with university officials and will have to take cultural sensitivity training.
The cheerleaders dressed as Indians wore dresses that looked as though they were meant to resemble buckskin and headbands with single feathers on the front.
Bonny Gordon, a student at the First Nations University, says such stereotypical images are feeding the underlying racism that still exists in Saskatchewan.
Regardless of the penalty imposed on the cheer team, Gordon says all University of Regina students should take cultural sensitivity classes.
"If they did ... they would have a better understanding of our people rather than to make fun of them," she said.
Chasity Delorme, another student at the First Nations University, says she was also offended by the costumes, which she says were a Hollywood-style portrayal of aboriginal people.
"That's not who we are," she said, explaining that aboriginal women never wore feathers in their hair or chanted with their hands slapping their mouths.
"I'm sure there's a few people on the team that probably knew it wasn't the right thing to do but didn't say anything."
The University of Regina's website states that approximately 10 per cent of its students have self-declared that they are of aboriginal descent.
It says that it has taken a number of initiatives in recent years to support aboriginal students, faculty and staff including expanding its aboriginal student centre as well as creating an aboriginal advisory circle.