It has ruled out replanting the poplar species at the Ripponvale stretch once the area had been cleared.
There are about 1200 trees along a 2km stretch and NZTA Central Otago maintenance contract manager Mark Stewart said about 400 trees over 800m of land would be felled in the coming weeks.
"A large number of these have been inspected and found to be hollow and rotten at the base."
More than 110 trees had been felled by the end of Thursday.
A historic fire along the water race behind the trees had caused further damage.
"When fire crews and police attended that fire, the state of the trees was commented on and an agreement made that they needed to be felled for everyone's safety in the area and on State Highway 6," he said.
The agency will consider its options for replanting at the end of the year.
However, it would not include poplars due to the problems the agency has with them near highways and their relatively short lifespan.
Philip Blakely, of Arrowtown, expressed his alarm at the removal of the "iconic and much photographed" poplars in email correspondence with Central Otago Mayor Tim Cadogan this week.
Mr Cadogan confirmed, in his response, the council only had limited influence and no ability to control the agency.
"I, like you, love the glorious sight of those trees in autumn and am sad to see what is happening," he said.
"Having said that, in my experience NZTA doesn't spend money unless it really has to."
