The statue of Manannán Mac Lir attracted world-wide attention when it was cut down from its site on Binevenagh Mountain overlooking Lough Foyle.
On Saturday, a MoD spokesperson confirmed it had been located.
Soldiers from 2nd Battalion Royal Irish Regiment, based in Newtownabbey, were in the forest near Limavady on Saturday morning after being flown there by Army helicopter.
They were alerted by ramblers in the area before helping to recover the statue.
PSNI Area Commander Chief Inspector Alan Hutton said: "I would like to take this opportunity to thank members of the local community and everyone involved in its recovery today.
"I would still appeal to anyone who has any information about the theft of this statue to contact Police at Limavady on the non-emergency number 101.
“Or, if someone would prefer to provide information without giving their details they can contact the independent charity Crimestoppers and speak to them anonymously on 0800 555 111".
Manannán Mac Lir is a sea deity in Irish mythology and is also said to have been the first ruler of the Isle of Man.
The original, six-foot statue was created by Co Tyrone artist John Darren Sutton, who also worked on the global hit television series Game of Thrones.
Made from fibreglass and stainless steel, the creation would have been difficult to difficult to move or hide.
When it was removed, a cross bearing the words 'You shall have no other gods before me' was left behind in its place.
Limavady Borough Council had been considering replacing the statue with one three times its original size.
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