The Magpies were investigating the gesture, with president Eddie McGuire saying Blair was unaware he was making a sexually suggestive sign.
Blair apologised in a statement released by Collingwood on Wednesday morning.
"I accept that a hand gesture I made during the on-ground celebrations immediately following the NAB Cup Grand Final last Friday night was careless and inappropriate," Blair said.
"It was never my intention to upset anyone and I sincerely apologise for any offence caused."
McGuire said the story only broke when a caller had brought it up with radio host Neil Mitchell on 3AW.
The Magpie president said the club had spoken to Blair who claimed he thought the hand sign - known as "the shocker" - had an alternative meaning.
AFL operations manager Adrian Anderson was kept informed on the issue and said on Tuesday night the matter was closed as far as the league was concerned.
