The figure of a young girl was made to 'comfort' women and girls who were forced to work as sex slaves by Japanese soldiers during World War 2.
Last month Japan recalled two of its diplomats from South Korea after an identical statue was erected outside its Consulate in Busan.
Japan also halted talks with South Korea that were ongoing in a currency swap arrangement between the two countries as the initial protest response to the erection of the statue.
According to the artists Kim Seo-Kyung and Kim Eun-sung, initially, they had planned on creating a memorial stone for the 1000th Wednesday demonstration.
These are weekly protests that have been held by survivors of the rape ordeals outside the Japanese Embassy in Seoul since 1992.
Up to 200,000 women were forced into sex slavery by Japanese troops during the war in China, Indonesia, Korea and Taiwan. Due to the surrender of Japan, most of the cases went unheard. On its part, Japan argues that the matter was settled during a 1965 treaty that normalized relations between the two countries.
In 1992, Japan admitted that its troops had taken part in mass rapes and offered an apology, saying compensation was out of the question.
The issue kept rearing its head until 2015 when Japan offered another apology, signed a landmark agreement and paid $8.7 million to a fund to help the victims.
Victims say that the apology was not sincere as Japanese history books downplay the incident and that the Japanese government did not go far enough in acknowledging responsibility.