Sean King was pulled out of class Wednesday after donning the makeup for a project requiring students to dress up as a historical figure.
The Colorado Springs boy said he was trying to honor the slain civil rights leader. His parents knew about his costume and came to watch the presentations.
School officials "thought it was inappropriate and would be disrespectful to black people, but I say that it's not, I like black people," the 7-year-old King told KRDO-TV.
The parents refused a request from the principal to remove the student's makeup and took him home, the station said.
School officials say the student will be welcomed back in school.
Blackface was common in minstrel shows in the 19th century when featured white performers played stereotyped black characters.
Steve Klein of The King Center in Atlanta told the station the youth apparently had good intentions but he said the child and his family need to understand some people are still offended by white people wearing the makeup.
"These shows portrayed blacks as subservient, childish and had negative stereotypes," he told The Associated Press on Friday.
Meridian Elementary Principal Erica Mason hopes to turn the situation into a teaching moment by asking the local chapter of the NAACP for help while setting up a class for adults and children to understand why stereotypes can be offensive.