Azar Iqbal's wife and children watched in tears as he was marched out of Atlanta airport and put straight back on a plane to Britain.
After landing on a flight from Manchester he was questioned by immigration officers who even asked if he knew any of the terror suspects arrested in Britain.
Mr Iqbal, who is from Gatley, Cheshire and his wife Rizwana were taking their three children Ibrahim, 5, Murvah, 10, and Mohin, 14, for a £5,200 two week luxury holiday at Disneyland, in California.
But despite being cleared by security before boarding the 9.30am Delta flight to Atlanta on 10 August at Manchester airport, he was held for questioning by immigration officials after the family landed in the US on the first leg of their trip.
He said: "They asked if I had heard about the arrests in Britain that had happened earlier that day. They said did I know any of the people involved?
"The whole experience was completely demeaning.
"They went through all the suitcases including the children's belongings before telling me I was being sent back because I needed a visa despite having a British passport."
Mr Iqbal was then marched by immigration officials to an aircraft waiting to leave for London as his devastated family looked on.
"They were in floods of tears, both my wife and my family saw how I was being treated. I told Rizwana to make the best of what was a ruined holiday because we won't be going back to America again."
Shahid Mustafa, manager of the First for Florida travel agency, which booked the Iqbals on the flight said: "Obviously, this is a backlash to the August 10 arrests, but personally I would put it down to plain racism."
A spokeswoman for Delta Airlines: "This is an issue which you would have to take up with the American authorities. Delta is not behind Mr Iqbal being refused entry into the United States."
Mrs Iqbal and the children are expected to return home on August 25.