President Kurbanguly Berdymukhamedov, who took power after the strongman's death in 2006, gave the order to remove the monument in January.
The rotation of the statue, which always faced the sun, was stopped several weeks ago.
On Wednesday it was removed and workers are now tackling the huge tripod base.
The 15m (50ft) statue and its 75m marble-covered plinth - called the Arch of Neutrality - were seen as representative of the excesses of Mr Niyazov.
The self-styled "Turkmenbashi" - meaning the father of all Turkmen - established a comprehensive personality cult.
Streets, cities and months were named after him and his family, and portraits of him hung across the country.
Since his death his successor, Mr Berdymukhamedov, has overseen efforts to remove the most prominent reminders of the late leader.
He has promised to introduce reform in the Central Asian nation, which under Mr Niyazov experienced two decades of authoritarian rule and near-total isolation from the outside world.
But critics say reforms to date have been mostly cosmetic - media remains controlled by the state, which has only one political party.
The gold-plated statue of Turkmenistan's late leader, Saparmurat Niyazov, has been removed from its giant plinth in the capital, Ashgabat.