Arborists started cutting down a beloved Moreton Bay fig tree in Randwick, known locally as the "Tree of Knowledge", for construction of Sydney's eastern suburbs light rail line on Sunday night.

About 40 people gathered at the intersection of Wansey Road and High Street where the tree, believed to be about 150 years old, had been enclosed by two-metre-high fencing earlier in the afternoon.

Randwick City councillors Kathy Neilson and Tony Bowen, and NSW Greens MP Mehreen Faruqi stood alongside residents on the street after work to cut down the tree began about 6.30pm.