Dee Jay, Super Street Fighter II
According to Wikipedia, Dee Jay was based on Tae Bo founder Billy Blanks. Billy Blanks, you may recall, also played the wide receiver who blows his brains out on the football field at the beginning of The Last Boy Scout, which is probably one of the ten best movies ever made. I guess what I'm saying here is that Dee Jay isn't really that much of a stereotype, except for his hip-hop style moves, but god damn The Last Boy Scout is awesome.
Barret Wallace, Final Fantasy VII
Moreso than the other characters on this list, Barret is an example of the residual racism that still hangs over global culture. He's an honorable and complex guy, quick to action but also with a nurturing instinct that informs his relationship with his adopted daughter Marlene. And yet... on the Japanese side of things, Square just couldn't help giving the guy a Mr. T haircut and a permanent scowl. The American translation is even worse, saddling Barret with uneducated, profane dialogue that makes him sound like a doofus. Why Barret, and no other character? Why, indeed.
By the way, if you're wondering why I haven't bothered to spotlight the other stereotypical Final Fantasy characters over the years, like the brooding goths Squall and Lulu, it's because moody goths have historically not been oppressed by the state and cultural institutions -- only by their parents.
Augustus "Cole Train" Cole, Gears of War
I was willing to overlook the Cole Train for most of Gears of War, even though, of all the characters in the game, he was the only one who couldn't spit out a sentence without swearing, and had been a pro athlete pre-Emergence Day. (At least Epic Games are equal-opportunity stereotypers, also giving us the tight-assed white guy, Baird. How much would it have blown your mind if Baird had been the cocky pro athlete and Cole the uptight wuss?)
Then I beat the game and was treated to the Cole Train rap song that plays over the end credits, featuring the repeatedly lyrics "Whooo!" and "This my kind of shit!" That just pushed it over the top. The only redeeming thing is that the Cole Train was portrayed by the same guy who played Terry Tate, Office Linebacker.
The Entire Cast of Def Jam Vendetta, Fight for NY, and Icon

The Def Jam games aren't games. They're a marketing nightmare. This is a case of savvy businessmen peddling an image to a large group of people who are not in on the joke. In the case of the most recent game, Icon, the horrid gameplay was really just the platter upon which endless courses of ads were served. Ads for clothes, electronics, record albums, and, most of all, the participants themselves. Product placement and celebrity endorsements are nothing new, but they should serve to accent the gameplay, not to take the place of it. Not that it matters if the game is hit. I'm sure the people who made this game are crying themselves to sleep at night, on top of a pile of money.
Jim, Tom Sawyer
Well, geez, just look at him. That would have offended the Confederate Army. At least this game never came out in the States. Thanks to Jeremy Parish for having once posted about it.