"NASCAR has gotta get off their ass and do the right thing and give this kid an opportunity to get back in a car," the racing legend said in an interview with CBS Sports.

"I think he's paid his penalty and he's served the penalty long enough where you know we've had similar instances in the sport that have happened and the penalties didn't last as near as long as this has lasted with Kyle."

As we previously reported, 27-year-old Larson dropped an n-bomb during a virtual race back in April ... clearly not realizing his audio was streaming out to people watching along on Twitch.

After crashing during a lap, Larson apparently had a difficult time communicating on his headset and radioed out, "You can't hear me? Hey, n*****."

Larson vehemently apologized afterward -- but NASCAR and several of Larson's biggest sponsors (including McDonald's and Credit One Bank) dropped him HARD.

Stewart says the cancellation of the guy has gone on long enough ... and he's urging the sport to bring Larson back ASAP.

"It's changed Kyle's world, it turned everything upside down and not only did it affect him, it affected his family and a lot of other people that didn't deserve to be affected," Stewart said.

"So I think it's been long enough. I think it's time for NASCAR to get off their ass and to do the right thing and allow him to come back to the series now."

For his part, Larson said in an interview with the Associated Press this week he's grown tremendously since the incident ... adding, "I was just ignorant. And immature."