The man being assaulted has special needs, police say. His assailants can be heard making derogatory statements against white people and President-elect Donald Trump.
In one part of the video they use a knife to remove part of his scalp.
Chicago police have described the video as a "sickening" possible hate crime.
"It makes you wonder what would make individuals treat somebody like that," Chicago Police Superintendent Eddie Johnson said in a press conference streamed on Twitter.
"I've been a cop for 28 years, and I've seen things that you shouldn't see in a lifetime, but it still amazes me how you still see things that you just shouldn't."
Police say the unnamed white victim is an acquaintance of one of the attackers and may have been kidnapped for up to 48 hours prior to the assault.
They say he has been released from hospital after being traumatised by the attack.
In the press conference senior police officers paid tribute to the speedy response of officers in rescuing the stricken man.
Several people can be seen laughing and smoking as the attack takes place.
The incident happened on Tuesday, police say, in a flat on Chicago's West Side. Police say they found the victim wandering in the streets in a disorientated and distressed state after the assault.
Later they say they responded to reports of an assault close to where he was discovered and uncovered evidence of violence and damage to property.
Police say the victim was a high-risk missing person and two men and two women are now in custody. One of the women is reported to have broadcast the beating on Facebook.
In June a Chicago man was shot dead while live-streaming a video of himself on Facebook.