A swastika was spotted flying from a Wagga Wagga light tower on Monday.
Veteran Tony Mason was exercising at the gym next to Robertson Oval early that afternoon when he spotted the offensive flag from a distance.
He said he initially thought it looked suspicious and after looking closer, realised the flag was sporting the symbol of the Nazi Party.
Mr Mason said as a veteran, the symbol raised an additional level of emotion.
"Things like that sort of catch your eye," he said.
"It's just not very community-minded to do something like that."
Wagga police Superintendent Bob Noble said police had not yet been contacted, but they may not be able to charge the culprit should they be found.
"If it were reported, it isn't really a criminal offence so we would not be able to do much in that situation," he said.
"But I do hope it doesn't become a series of occurrences around town, we don't need that type of message in our community."
Wagga mayor Greg Conkey has condemned the flag, saying it does not reflect the majority of the community's views.
"I'm outraged, and I know a vast amount of people in Wagga would be outraged," he said.
"It doesn't reflect this city in any way, shape, or form. I'll get onto it and make sure the flag is removed first thing."
Without an indication on how the flag came to be flown from the tower, Mayor Conkey said every effort would be made to remove it immediately.
"Bearing in mind if it's on the top of a light tower, it's going to take some money to remove the flag - but we'll make sure it gets taken down as soon as possible," he said.
NSW Jewish Board of Deputies chief executive Vic Alhadeff called for the community to condemn the flag and make known that Wagga will not tolerate racial-based prejudice.
"All well-meaning Australians are sickened and appalled by the public display of the Nazi swastika," he said.
"This symbol represents the regime which thousands of Australians fought against in order to protect our freedoms. It also represents the regime which murdered six million Jews."
Mr Alhadeff said the display in Wagga is just one of what has become a worrying growth of anti-Jewish sentiment worldwide.
"There has been an alarming spike in antisemitic incidents in recent times, both globally and in this country, and the display of the Nazi flag sends a chilling warning that there are those among us who seek to spread racial hatred and violence in our society," he said.
"Our hope is that all who care about protecting the Australian way of life will condemn this act and make it clear that there is no place for a swastika on the streets of Wagga.