A ceremony to bless the ship was held nearby before workers got started dismantling the 60-metre vessel, named the No. 18 Kyotoku-maru, according to officials in the city of Kesennuma, which was flattened in the disaster.
The scrapping operation came after nearly 70 percent of local people said in an opinion poll that they wanted it gone.
The work is scheduled to finish by October 19, officials said.
Japan's Jiji Press news agency quoted the ship's owner as saying: "I apologise for troubling disaster sufferers with the presence of the ship, but it helped show the dangers of the tsunami."
The stranded vessel had been swept around 500 metres inland by the tsunami on March 11, 2011, and survived a subsequent fire that engulfed the small city on Japan's northeast coast.
Since then, the partially charred blue and red vessel has rested in the middle of a residential district, drawing visitors who pray and leave flowers at the site.
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