The tree was meant to be an advertisement on the street for the website MySecretCase, which sells sex toys for women, TheLocal.it reported.
About 100 different sex toys adorned the tree for passersby to "see and touch," with company representatives on site to answer questions.
"It's much less vulgar than lingerie adverts or dancers you see on TV," said Norma Rossetti, one of the brand's three partners.
However, police removed the tree, saying they didn't like the decorations.
"The nature of the project was not fully made clear in the request we received for authorization" a statement from the Milan council said. "On the basis of this discrepancy, we have begun the process of canceling the project."
"It is an initiative which makes people uncomfortable," council member Chiara Bisconti told Corrier della Sera.
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