The rotting corpse of the 40-year-old male creature was discovered by a plantation worker on Monday in Riau province on Sumatra island.
"The elephant's head had been cut off and its severed trunk was found a metre away from the body," chief of the local conservation agency Suharyono, who goes by one name, said in a statement on Tuesday.
Authorities said the mutilated elephant had likely been dead for almost a week, adding that they were looking for those responsible.
"We suspect the elephant was hunted and killed and then its head was cut off to remove the tusks," Suharyono said.
Rampant deforestation has reduced the species' natural habitat and brought them into increasing conflict with humans, while their tusks are prized in the illegal wildlife trade.
Last year, the corpse of an elephant was found with its tusks missing in Aceh province in an apparent poisoning case.
Indonesia's environment ministry estimates there are fewer than 2,000 Sumatran elephants still in the wild.
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