Police believe the John Batman Memorial, located on Queen Street opposite the Queen Victoria Market, was targeted about 2.20am.
The statue appears to have been cut from its plinth and has been extensively damaged.
Security guards could be seen today picking up the pieces of the statue, which was erected in 1881.
Police said they are continuing to investigate the incident.
Batman is widely regarded as one of Melbourne’s founding fathers, but has been described as a controversial figure due to his dealings with Indigenous Australians.
Several statues will be guarded by security over the next 24 hours including the Cook monument in St Kilda’s Catani Gardens.
