Deborah Ovens from the Denver City Hotel in Coolgardie, west of Kalgoorlie, placed a sign on the wall of her hotel warning customers that she would not serve Indigenous patrons until her smartphone was returned.
The sign read: "No indigenous person will be served in this hotel until my apple i phone is returned that was stolen on 1st March 2014."
At the bottom, Ovens included the name of the alleged thief.
According to WAToday.com, the sign attracted 833 shares and 267 comments on Facebook.
Ovens later told Radio 6PR that she regretted her decision and apologised on air.
"I was pretty upset and in hindsight I know it was the wrong thing to do and I do apologise to the Aboriginal community and I was just hurt," she said.
"I've lived in an Aboriginal community for the last decade and I have complete respect for the whole people as I say, so putting that on the sign was wrong."
A talkback caller, Lisa, told Radio 6PR her nephew was refused service when he entered the pub with a group of friends.
"We went up to the bar and they wouldn't serve him, he asked why not and they just pointed to the sign," Lisa said.
"He couldn't believe it, he was really shocked.
"It's assuming that all Aboriginal people know each other and my nephew has no idea who the person is.
"He's been for a drink there before, but as soon as they pointed to the sign he and his work friends left and went to another pub."
Ovens said Lisa's claims were untrue.
"The lady who called in earlier about her nephew who came in with workmates, I hate to say, is not correct and I do have witnesses who would verify that.
"He came in on his own, he asked and I did say 'no, I’m sorry, I can’t serve you' but there were no other people with him, he was on his own."
Although she has apologised, Ovens said she was prepared to face any legal ramifications for her actions.