Anger has erupted after the statue of the Virgin Mary was put on top of the huge structure at Lanark Way in west Belfast.
People in the area said it was the same statue which was stolen from a memorial to a local suicide victim in recent days.
The man, an architect, died before completion of a project he was overseeing.
It is understood the statue was stolen between Friday night and Monday morning.
The icon later appeared on top of the Lanark Way bonfire.
It is the second year in a row that a statue of the Virgin Mary has appeared on the bonfire.
Police said they were aware of the matter and were investigating.
The statue has since been removed from the bonfire, built ahead of the annual 11th night events.
Sinn Féin councillor Ciaran Beattie said the statue's theft was aimed at ramping up tensions in the area.
"The theft of this statue must be condemned," he said. "To add insult to injury the statue was then pictured on top of a nearby loyalist bonfire at Lanark Way and there are concerns in the local area that it will be burned.
"This theft was clearly designed to heighten tensions in the area.
"The Orange Order has said bonfires should be community celebrations. The theft of this holy statue flies in the face of those public positions. Is this part of the so-called graduated response that the alliance of unionist parties and the representatives of loyalist paramilitaries have been talking about?
"I would appeal for someone to have the decency to return this statue safely."
DUP councillor Brian Kingston disputed claims a statue had been placed on the bonfire.
"I have spoken to senior PSNI officers and local community representatives and no-one has seen this alleged incident occurring," he said.
"I have been assured by people close to the bonfire builders that no statue has been placed on the bonfire."
He appealed for the return of the statue reported stolen from the Springfield Road.
Last July a statue of the Virgin Mary was defaced and put on the Lanark Way bonfire. It was returned to Fr Gary Donegan, Rector of Holy Cross Church, by a member of the Protestant community before the bonfire was lit. The face of the statue was missing and it had two major cracks along with scorch marks on the back.
It is not the first time loyalist bonfires have caused anger.
Last year a figure, believed to depict Fr Matt Wallace, a west Belfast priest who committed suicide, was placed in a grotesque pose on an 11th night bonfire in the loyalist Rathcoole estate in Newtownabbey.
An effigy of the Pope was burnt in Sandy Row, while the national flags of Poland, Palestine and the Vatican were burned at Cluan Place. However, in one case, bungling loyalists confused the flag of the Ivory Coast with an Irish tricolour, mistakenly burning it on a bonfire.