Trump appeared charmed by the female audience member's slur and repeated it for the audience. "You're not allowed to say it, and I never expect to hear it from you ever again. She said that he's a pussy," he said.
The crowd erupted in applause as Trump jokingly reprimanded her. The exchange came as Trump was lambasting Cruz for refusing to go as far as Trump in using torture on detainees.
Cruz spokesman Rick Tyler responded via email, saying, "Let's not forget who whipped who in Iowa."
The Associated Press contributed to this report.