A specialist race-crime unit will re-examine the death of Michael Menson, which police originally treated as a suicide.
Mr Menson, 30, was found burning in a street in Edmonton, north London, and died in hospital of multiple organ failure 16 days later in February 1997.
Despite his repeated claims that he was attacked by a white gang, detectives assumed he had set fire to himself.
Jack Straw, the Home Secretary, met members of Mr Menson's family yesterday, and was said to be "visibly moved" in the 50-minute meeting.
The recently formed Racial and Violent Crime Task Force, which is led by Deputy Assistant Commissioner John Grieve, will re-examine the case.
This is the second suspected race killing that the Metropolitan Police has agreed to re-examine within the past month. A new investigation has been set up into the death of Ricky Reel, 20, an Asian student, a year after his body was dragged from the Thames. Police concluded that he had died accidentally, but his family is convinced his death was caused by a racially motivated attack by a gang of white youths.
After yesterday's meeting Mr Menson's sister, Alex, said: "Did the police fail to take this case seriously because they were incompetent, idle or was it that the victim was a young black man, and they did not take the time or trouble to find out what happened to him?"
Scotland Yard has admitted that senior officers made serious mistakes and an inquest jury decided last month that Mr Menson had been unlawfully killed. The Police Complaints Authority launched an inquiry into the Met's investigation. Mr Menson, son of a Ghanaian diplomat, had musical success in the 1980s with the band Double Trouble but was later diagnosed as schizophrenic.
n Avon and Somerset Police was criticised yesterday for painting a misleadingly rosy picture of community relations in its evidence to the Stephen Lawrence inquiry. Officers based in inner-city Bristol told the inquiry that police had made great strides towards regaining the confidence of black and Asian residents in neighbourhoods such as St Paul's, scene of two riots in the 1980s.