The King Arthur pub has been reduced to rubble by demolition teams, paving way for a new Aldi supermarket.
Residents have long been split over the fate of the locally-listed building, which closed down as a pub in 2012.
It became an eyesore after being left for the area having been left abandoned and was the target of vandals and arsonists.
The future of the site was sealed by planning bosses last year. The proposals includes a 94-space supermarket car park.
Councillor Alan Finch, who has overseen the planning process, said: "It is a sad time to see the King Arthur pub go, but I think it's fantastic for the local community to have a new outlet to go to.
"There is nothing like this around the Castle and Priory area. We are looking at new jobs for the local people."
Supermarket giant Aldi stepped forward with plans to develop the site last year after no other investors came forward. Bosses claimed 40 new jobs would be created.
Dudley North MP Ian Austin asked residents last year living within a mile's radius of the pub whether they backed the plans. Out of more than 900 respondents, 80 per cent said yes.
But Councillor and UKIP MEP Bill Etheridge hit back at the plans with a petition of 102 signatures voting against it.