A climate of fear has enveloped the sleepy seaside community of Waitati after a beloved miniature horse died following a stabbing attack.

Dunedin Mayor Dave Cull said yesterday the incident was of ''grave concern'' for the community.

Police visited the crime scene in a paddock following the death of Star overnight on Monday, after suffering 41 stab wounds in a midnight attack on Sunday.

Police believe the prolonged attack was carried out with a knife, and veterinarian Peter Gillespie says more than one person is likely to have been responsible, as Star would not have stood still.

Star (right) in happier times. Photo / Supplied

Star's owner, who did not want to be identified, confirmed yesterday morning her beloved pet had died overnight.

''I'm so angry ... and the thing that was getting me through this was that the little guy was going to pull through,'' she said.

''One of those tiny little cuts actually perforated his bowel and they came in this morning and he was dead.

''A *** lunatic with a knife is in our community and killed a little baby horse.''

Senior Sergeant Craig Dinnissen, of Dunedin, appealed for anyone who saw anything in the Waitati area near Brown and Pitt Sts on Sunday to come forward.

''Unfortunately, the horse has died following the injuries sustained in the frenzied and prolonged attack, which is absolutely deplorable, and we will look to hold the person or persons responsible to account.''

The owner of the pet was upset and devastated following the attack, as were the community and investigating officers, Snr Sgt Dinnissen said.

Blueskin Bay librarian Louise Booth said a Givealittle page for the horse had been taken down after raising $8500, and the owner's family were requesting privacy as they grieved together.

The small, tight-knit community was in shock and many were fearful after the ''atrocity'', Booth said.

''People's jaws dropped. They're crying, thinking 'What do we do?'

''It's a lovely peaceful community where we care for each other.

''I don't know if it's a random act or someone with a vendetta but it's absolutely sick that could happen to a defenceless animal.''

Flowers were left beside the Waitati paddock in which miniature horse Star was attacked - the horse later died, and Blueskin Bay librarian Louise Booth said the community was reeling. Photo / Gregor Richardson

Asked if there was anything happening in Waitati that could spur the attack, the woman said she did not believe so.

''There's definitely a few personality clashes in the community, and there's certainly strong opinions and people that disagree with each other, but to go to that level is just completely out of character for the community.''

Otago Equine Hospital veterinarian Dr Gillespie initially expected the horse to pull through after a five-hour surgery conducted by a colleague.

''The funny thing was it was the smallest incision down the side ... that was the one that nicked the bowel.''

Horses had a poor tolerance for peritonitis, and once the intestine was punctured, death was inevitable, he said.

At a Dunedin City Council meeting yesterday, Diane Yeldon turned up to give a public forum presentation, but began by telling councillors they should consider having a minute's silence to mark the death of ''the little horse''.

The community was horrified by what had happened, she said.

Cull said councillors shared concerns there was a person, or people, ''in our community who would do something like that''.

The incident was of ''grave concern'', he said.

- Additional reporting Chris Morris