The 4-metre-tall statue, which depicts Erdogan raising his right arm and pointing, was erected on Monday evening as part of the Wiesbaden Biennale art festival.
Many residents were initially confused as to why a statue of the Turkish president was on display in the city.
Local authorities said in a statement that they had given permission for a statue to be erected on the city's Square of German Unity for the duration of the festival, without knowing who it would portray.
Organisers said the use of the statue in the festival, which is taking place this year under the slogan “bad news", was intended to provoke debate.
"It is certainly appropriate to conceive of Erdogan as a controversial figure, and one that we are allowed to discuss freely here in this country," festival director Uwe Eric Laufenberg told Reuters.
But while some welcomed the statue, others were less impressed.
Passer-by Dieter Laun said the installation was a "provocation" that would damage the relationship between Turks and Germans in the city.
“The man has hundreds of people on his conscience,” another resident said.
Since being erected the statue has been defaced with graffiti.
Relations between Germany and Turkey have soured since Berlin condemned Ankara's arrests of some 50,000 people, and the suspension or firing of 150,000 others in the wake of a failed coup attempt against Erdogan in 2016.
But the statue looks set to stay in place throughout the festival, with a local magistrate noting that it demonstrated artistic freedom and that there was no legal reason to remove it.
The festival is set to run until September 2.
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