Last week the university demolished a two-storey Queen Anne-style villa, saying it was earthquake-prone and too uneconomic to strengthen.
A neighbouring bungalow in Union St West was also demolished.
The villa was built by architect, Percy Laing in 1909 for Henry and Mary White who lived in it until their deaths in the 1950s.
The university has defended the demolition, saying the villa was earthquake-prone and had subsided in places.
Southern Heritage Trust chairwoman Jo Galer thought the university’s actions were not in the spirit of its commitment to maintaining its "town and gown" relationship.
Its lack of communication regarding the demolition did not give the community an opportunity to save the historic villa.
"Our trust believes that the pile of rubble now left behind in Union St leaves a glaring hole in a historic streetscape.
"The ‘green space’ intended provides us with no comfort. This is yet another sad heritage loss for Dunedin."
Dunedin deputy mayor Sophie Barker was "pretty upset" about the demolition and was surprised Otago University obtained permission.
"It is one of the top 10 most beautiful campuses in the whole world. Will it remain [in the list] if they keep taking chunks out of it?"
She believed the university could have done more to protect the villas such as applying to the Dunedin Heritage Fund for support.
"There are many buildings with low seismic ratings so I don’t think they can use that as an excuse," Ms Barker said.
Otago University property services director Dean Macaulay defended the demolition, saying it had two consultant engineers assess the villa who both identified the buildings as complex and uneconomic to repair.
"Not only was the building constructed from unreinforced masonry in 1910, but it had also subsided in places, causing cracking."
The site of the villa is a strategic location for future development on the campus so it did not consider selling the villa.
The villa was not heritage listed.
