Eyewitnesses told the BBC tear gas and live bullets were fired after residents formed a human chain to stop the houses from being destroyed.
The authorities have not yet commented on the incident.
Amnesty International said the incident was "a violation of human rights", and shared video footage which showed bulldozers clearing a path through the area.
It said the Lagos State government had ignored a court order made in January, stopping the forceful eviction of residents from the community.
Megan Chapman from the Justice and Empowerment Initiative (JEI), which is working with the community, told the BBC that residents saw excavators near the entrance to the community in the morning.
Everything on land was destroyed "and half of what was on water" was destroyed, she said.
The Lagos state government has previously said that it is "mindful of the fundamental rights of the various residents living in the area".
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