The controversy erupted after the authorities installed colourful and massive fiberglass sculptures of squatting yetis at Kathmandu landmarks to start the government's "Visit Nepal 2020" campaign, an Efe news report said on Tuesday.
Some people complained that the mascot looked like a Japanese sumo wrestler and others believed that the statues represented Hindu and Buddhist deities.
Some people even started praying in front of the statues that had religious pictures or symbols painted onto them. Pictures of women and children worshiping the mascot went viral on social media.
The statue placed at the Basantapur Durbar Square had an image of goddess Kumari painted on its forehead and back. The deity is worshiped by Hindus as well as Buddhists.
"The yeti is a mystical beast (and) this (the statues) has damaged the religious feelings of the people," Ganapati Lal Shrestha, a heritage activist, told Efe news.
Locals and activists with the help of the authorities removed the religious pictures or symbols painted on the sculptures by spraying color on the statues installed at Basantapur and Boudhanath
Aditya Baral, a co-founder and country director of XcelTrip Nepal, said that a good idea to use yeti mascots to attract more foreigners has turned into an avoidable "religious ordeal".
Finally, all the statues, built with fiberglass at a cost of 500,000 Nepalese rupees ($4,385) each, were removed by the end of the last month.
"It took four months to design the mascot," said Bijay Maharjan, one of the 108 artists involved in the yeti's mascot project.
"Our intention was not to hurt the religious sentiments of the people. We designed it by imagining the laughing Buddha," Maharjan told Efe news.
The yeti, also known as the abominable snowman, is a mythical beast that is often described as a furry, ape-like creature taller than an average human and is believed to inhabit the Himalayas, Siberia or the Central and East Asian regions.
The elusive creature is part of the region's mythological folklore, although the hunt for proof of its existence has been taken up by many self-described crypto-zoologists across the world.
With no solid evidence available for its existence, most scientists dismiss the creature as mythical. But stories of people seeing the creature or its footprints are common.
In Nepal, the term yeti is a merger of the Sherpa words "yah" (rock) and "teh" (animal).
There have been numerous attempts in recent years to solve the mystery of the yeti.
In 2011, DNA tests on a "yeti finger" taken from Nepal to London believed to be half a century old was found to be a human bone.
In 2013, DNA tests on hair samples carried out by Oxford University genetics professor Bryan Sykes found that the strands matched those from an ancient polar bear.
( With inputs from IANS )