Kamran Razzaq is the Conservative candidate for the Cradley and Wollescote ward of the Dudley Borough Council in the local elections on Thursday.
The seat is currently held by Labour's Tim Crumpton.
But in a leaflet distributed to constituents, which has since been circulated on social media, Kamran Razzaq asked: "What have Labour delivered to this ward: Hepatitis."
The leaflet also goes on to dismiss UKIP as delivering two defibrillators and petitions to the area.
Mr Razzaq has since been suspended from the party.
A Conservative spokesman said: “Kamran Razzaq has been suspended and an investigation is underway.”
Leader of the Conservatives at Dudley Council, Councillor Patrick Harley, added: "He has been suspended from the party and an investigation is on-going. It would be wrong to comment further at this stage."
The leaflet has drawn criticism from Labour councillors in the borough, as well as members of the UKIP party in Dudley.
Dudley Labour leader, Councillor Pete Lowe, said: "It is one of the rare occasions that words fail me. It is probably one of the most disgraceful piece of political literature I have seen in the years I have been politically active.
"I welcome the fact that the local Conservative MP, Margot James, apologised very quickly and the fact that he was suspended from the party.
"Politics should be better than this."
Fellow Labour Councillor Adam Aston said: "I welcome the fact that he has now been suspended. It was an absolutely appalling leaflet.
"I don't know what he was thinking putting something so utterly ridiculous on a leaflet. It is shocking.
"The party were completely taken aback by it. We try to campaign positively and support positive messages – and leaflets like that are the worse kind of negative campaigning.
"It puts voters off and we wonder why turn-outs are so low and stuff like that makes it worse."
UKIP Councillor Dean Perks said it was the 'most disgusting thing' he had ever seen on a political leaflet.
He added: "Being a member of UKIP we have had some colourful characters nationally in the past. My job is to vet UKIP leaflets locally.
"I could not believe the leaflet when I saw it. It is just disgusting. It is is the worst political leaflet I have ever seen.
"For a candidate or for anyone to accuse a political party or anyone delivering hepatitis it is beyond the pale.
"It really is taking politics to a new low. It is a shame this has happened in Dudley."
Mr Razzaq is a former Labour member who crossed to the Conservatives.
In 2016 he contested the Wordsley seat on Dudley Council for the Tories.
The leaflet appears to refer to a recent hepatitis outbreak in Lye, which was highlighted by Councillor Crumpton, in a overcrowded flat.