The device was exploded by Royal Navy bomb disposal experts yesterday.
The Navy divers of the Northern Diving Group travelled from their home at HMRC naval base on the Clyde at Faslane to attach explosives to the torpedo on the seabed in Scapa Flow, Orkney.
During the initial detonation, a section of the bomb containing its own explosive charge broke free and appeared on the surface.
The divers then carried out a second controlled explosion to destroy this section.
They now hope to salvage part of the torpedo, including the propeller, for public display.
The device was spotted lying in about 35 metres of water on the seabed in February during a routine sonar survey carried out by Sula Diving for Orkney Islands Council.
It was then filmed by a remote operated vehicle and examined by Navy divers who drew up a plan for its safe disposal.
David Sawkins, the council’s deputy harbour master, said: “The torpedo had been sitting on the seabed of Scapa Flow for almost 80 years.
“Although it posed minimal danger to shipping, our responsibility is to operate a safe harbour and, as it was likely to contain live explosives, the prudent course of action was to alert Royal Navy bomb disposal experts and arrange for its safe disposal.
“This was carried out with great professionalism by the Navy divers and we are grateful for their assistance and expertise. The hope now is that the rear section of the torpedo, including the propeller, will be recovered and after a full examination returned to go on display in Orkney later in the year.
“It would be a poignant reminder of the huge loss of life when the Royal Oak went down in October 1939.”
The Revenge class battleship was torpedoed by a German U-boat on 14 October, 1939, with the loss of 883 lives.
The wreck remains on the seabed and each year members of the Northern Diving Group travel to Orkney for a commemoration.
Lieutenant Commander Tony Hampshire said: “To think that this torpedo could have been one fired at HMS Royal Oak brings the tragedy home.
“Those who served with the ship were incredibly brave individuals.”