Gair Rhydd, winner of newspaper of the year at the 2005 Guardian Student Media Awards, printed the cartoons in this week's edition but all copies were quickly withdrawn.
As well as the suspending the editor and three other staff on the student paper pending the results of the investigation, the Cardiff Students' Union has launched an investigation into the publishing of article, with which Gair Rhydd's editor is fully cooperating.
A spokeswoman for Cardiff Students' Union said: "The Students Union very much regrets any upset caused or disrespect shown by the publication of the controversial cartoon and has taken immediate action by promptly withdrawing all copies of this week's edition of Gair Rhydd."
The Students' Union distanced itself, and the university, from the publication by adding the views were those of the editorial team and independent of the Students' Union or University.
The union said: "The editorial team enjoy the normal freedoms and independence associated with the press in the UK, and are expected to exercise those freedoms with responsibility, due care and judgement."
The cartoon depiction, which first appeared in a Danish newspaper, has been widely condemned by Muslim leaders and politicians, and provoked violence outside Danish embassies for depicting the Prophet Mohammed in a blasphemous way.
The cartoon has since been reprinted in France and Germany and has led to as many as five deaths, as Muslims protest around the world.
The journalists and editor of Gair Rhydd, which translates as "free word", were unavailable for comment at the time of going to press.
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