A video showed a number of workers at Stoneleigh Care Home in Oldham, Greater Manchester, dancing on chairs and doing a "wheelie" in a wheelchair in the kitchen and communal area.
The clip, branded as "unacceptable" by a local councillor, was said to have been taken following earlier VE Day celebrations at the home and when no residents were present.
All those staff involved have been suspended and residents will undergo precautionary Covid-19 tests.
In a statement the council said: "Oldham Safeguarding Partnership has launched an investigation into a local care home after a video was published on social media showing staff behaving in an unacceptable manner.
"As part of safeguarding measures that have been put in place, all staff involved have been suspended by the care home while the investigation is being carried out.
"The area has been closed off to residents while a deep clean is carried out.
"As a precaution, all residents will be tested for the coronavirus."
The council is also reviewing the infection prevention measures of the private care home run by Master Palm Properties Ltd.
Councillor Zahid Chauhan, cabinet member for health and social care, said: "The immediate launch of our safeguarding procedures shows you just how seriously we are treating this.
"The scenes showed in video footage are totally unacceptable.
"Our focus is the safety of all residents and to ensure that the care delivered at the home is of the highest possible standard."