Residents in a popular Pelorus Sound bay are devastated a giant tame eel which had been there for more than a decade has been hacked up and used as bait.

Ella the eel lived in a freshwater pool at Nydia Bay near the walking track.

Resident Martin Sygrove erected a sign about eight years ago saying "no fishing, pet eel", near the small pool where the eel lived.

The sign was found smashed at the weekend, and the 1.2-metre-long eel had gone.

It was found in a dinghy on the beach on Sunday, cut up and with parts missing, presumably used as bait, Sygrove said.

Nydia Bay residents were extremely upset Ella had been killed, he said.

"This eel was particularly friendly. She got more and more tame, to the point where she'd let you touch her," he said.

"I'm so sad she's gone, I've been talking to her for 10 years. She wasn't just my pet, she was everyone's."

The eel, which was estimated to be between 60 and 80 years old, was a bit of a local celebrity, Sygrove said.

People who visited the bay often stopped by the pool where she lived to feed her and take photos, and she was a key attraction for children on school trips.

She loved honey-cured bacon and ham, but was a bit disdainful of mussels and oysters, which she could get herself, Sygrove said.

The native longfin eel is ranked as an "at risk – declining" species in the New Zealand Threat Classification System listings (2009). It wasn't yet listed as an endangered species.

"What they did wasn't illegal, just horrible," Sygrove said.

The species lived to up to 80 years old and bred only once at the end of their lifetime.

Two young men in their late teens or early 20s who stayed at the Nydia Bay campground during the weekend owned the dinghy the eel was found in.

Police were alerted after firearms were let off in the bay on Saturday. The men allegedly fired shots from the camp on both Saturday and Sunday, aiming at seagulls and in the direction of a house on the peninsula, Sygrove said. "The neighbour's house was in the direct line of fire, with bullets winding over the top of their house."

The young men were also allegedly responsible for breaking trees and putting branches over the track. Sygrove didn't see the men, but talked to French tourists who left because they felt intimidated by them, he said.

Nydia Bay's On The Track Lodge owner Duncan Francis said he was devastated when he learned Ella had been killed.

"She was the mascot of the bay," he said.

Lodge guests regularly walked to the freshwater pool to feed her.

When the eel felt the vibrations of people approaching she would come out to be fed, he said.

"She would let you pat her. She was just beautiful."

A police spokeswoman said while it was upsetting for residents, no offence had been committed in the killing of the eel. No further action would be taken.

Police were investigating the claims of firearms being used, but there was also no clear evidence of an offence, she said. The people in question had left the area before police arrived.

A Department of Conservation spokeswoman said DOC was aware of the incident.