The company said it might not agree with the slurs and swear words used in the videos but that it wants to allow "everyone to express their opinions".
Controversy flared up this week after Vox video host Carlos Maza said that conservative YouTube star Steven Crowder was using his channel to launch a harassment campaign.
Mr Maza said Mr Crowder had posted a series of videos in which he used offensive slurs and attacked him for being gay. Mr Crowder then published an ironic apology video in which he repeated those same insults.
A post in which Mr Maza aggregated some of those attacks has been retweeted by thousands of accounts, and watched more than two million times.
Now YouTube has said it will allow those videos to stay up.
Numerous commentators point out that the decision comes right at the beginning of Pride Month. As the celebration began, YouTube has made much of its commitment to LGBT rights, including transforming its Twitter page with a rainbow theme.
YouTube said in a long tweet thread, posted as a reply to Mr Maza, that it had investigated his claims of harassment and had made the decision after an "in-depth review". The videos were "clearly hurtful", YouTube said, but did not violate its policies.
"Thanks again for taking the time to share all of this information with us. We take allegations of harassment very seriously–we know this is important and impacts a lot of people.
"Our teams spent the last few days conducting an in-depth review of the videos flagged to us, and while we found language that was clearly hurtful, the videos as posted don’t violate our policies," YouTube continued, before laying out its policies "explain this decision".
"As an open platform, it’s crucial for us to allow everyone–from creators to journalists to late-night TV hosts–to express their opinions w/in the scope of our policies. Opinions can be deeply offensive, but if they don’t violate our policies, they’ll remain on our site.
"Even if a video remains on our site, it doesn’t mean we endorse/support that viewpoint."
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