Russell M. Arundel, 75, a businessman, sportsman and prominent fox-hunter who was involved in a celebrated hoax, died yesterday in Doctors Hospital here after a long illness. He lived in Warrenton, Va.

In 1943 Mr. Arundel founded and became president of the Pepsi-Cola Bottling Co. of Long Island. He retired formally in 1966 but remained active in PepCom Industries, which grew from the company.

Mr. Arundel was master of fox hounds of the Warrenton Hunt from 1950 to 1954, and was its joint master from 1962 to 1968. After becoming chairman of the Virginia Gold Cup in 1950 he helped make the race one of the nation's best known steeplechasing events.

Long interested in wildlife conservation, Mr. Arundel sponsored in the 1950s a worldwide survey of rare mammals. The survey was regarded as one of the first of focus attention on the threat to endangered species.

In 1949 Mr. Arundel bought a 40-acre island off the coast of Nova Scotia, and called it the "Principality of Outer Baldonia," although in fact it was part of Canada.

A "declaration of independence" gave inhabitants the right to lie, among other rights, and eventually this came to the attention of the Soviet Union.

An article in a state-controlled Soviet publication was bitterly critical of Baldonia's "fuehrer" and declared that he had the aim of "turning his subjects into savages."

The affair found its way into a book on famous hoaxes.

In 1952 Mr. Arundel was questioned by a Senate panel that was investigating the fitness for office of Sen. Joseph R. McCarthy (R-Wis.) The questioning was about a $20,000 note Mr. Arundel had endorsed for the senator in 1947. Mr. Arundel said the endorsement was a minor financial transaction for a "friend."

In 1945 Mr. Arundel had been named in Congress as an influential lobbyist and had once represented sugar firms and other companies. He said in an interview that the subject of sugar was unconnected with endorsement of the McCarthy note.

Mr. Arundel was born in Jacksonville, Ill., and graduated from the University of Chicago. He came to Washington in 1927 and became secretary to Sen. Jesse H. Metcalf (R-R.I.).

In the 1930s President Roosevelt named him to the Mount Rushmore Memorial Commission. Mr. Arundel, a former newspaperman, wrote two books on the Roosevelt years, including "Roosevelt Doodles," (1936).

In addition to his wife, Marjorie, Mr. Arundel is survived by a son, Arthur W., of McLean, a daughter, Jocelyn Alexander of Washington; a brother, Howard, of Jacksonville, and eight grandchildren.

Arthur Arundel is publisher of four newspapers in Virginia - The Reston Times, the Loudoun Times Mirror, the Fauquier Democrat and the Rappahannock News. He was formerly owner of radio station WAVA.

The family requests that expressions of sympathy be in the form of contributions of the Warrenton rescue squad.