Diggers started destroying the sheet-metal shacks in the Talus 2 slum in the Majicavo area at around 0430 GMT on Monday, AFP journalists saw.
Police wielding crowbars entered the homes to check no one was inside before the destruction began, while the electricity and water supply was cut.
Mayotte's top state official Thierry Suquet said on the scene that there were "162 shacks slated for demolition."
"Today, half the families who lived in this neighborhood have been re-housed," he added.
Some said they had been left without shelter, however.
"I have nowhere to live for the moment," said Fatima Youssouf, one of the oldest people in the shanty town at age 55.
She added that she had been unable to remove some of her possessions from the home where she invested all her savings.
Another resident, Zenabou Souffou, wept at the sight of the construction machines, telling AFP she had been living in the area for 25 years and brought up seven children there.
Her husband, a demolition worker, had to be taken to hospital when he fainted as the work reached the door of his own mother's house, she added.
France deployed hundreds of police officers in Mayotte - the country's poorest region - since April to prepare for a major slum-clearing initiative called Operation Wuambushu ("Take Back" in the local language).
France's Interior Minister Gerald Darmanin wrote on Twitter that his "political initiative is paying off."
"We are continuing to destroy shanty towns where many families were living in disgraceful conditions, while offering to re-house them," he added.
Suquet also insisted that evicted families were being provided for, saying the state's "balanced" policy would offer "appropriate lodgings" to "French citizens and regularized foreigners living in these conditions."
Out of Mayotte's estimated 350,000 residents, half do not possess French nationality - with the number falling to one-third in the shanty towns.
The French island sits in the impoverished Comoros Islands archipelago, with thousands of Comorans making the trip across to Mayotte in search of higher living standards every year.
The influx has caused major tensions on Mayotte, where many locals complain about crime and the strains put on overloaded state infrastructure.