The woman was arrested and charged with using offensive language after a video recording her tirade was posted online and went viral, sparking a social media backlash.
The woman, who told the media her name was Sue Wilkins but whose real name is reportedly Karen Bailey, allegedly mocked the language and facial features of the other passenger on a Sydney to Newcastle train on Wednesday, Australian Associated Press reported.
Her rant began by shouting at two children aged 7 and 10 when they did not give up their seat to her.
She turned her attention to a man who was filming her, and then launched into a racist tirade against the Asian woman he happened to be standing beside him.
"He's too lazy to jerk off, he can only get a gook," Bailey was filmed saying.
The term gook is a disparaging term to describe Asians.
"He can't even get a regular girlfriend, it's so sad, he's got to get a gook."
She then began to mock the woman by speaking in a stereotypical Asian accent and pulling her eyes back in imitation.
After video of the attack went viral, the women told the Nine Network she just had a "brain snap" and couldn't stop.
"I was just getting all this anger out at anybody that would be near me, anybody at all," she said.
"No one deserves to be spoken to like that".
If found guilty of offensive behaviour, she faces a 500 Australian dollar fine.
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