Al Fayed, who sold the club to American Shahid Khan for £150m in July, insisted Jackson was a Fulham supporter.
The club said the statue does not fit in with the revamp of the stadium.
Al Fayed had initially planned on placing the statue - which was commissioned after Jackson's death in 2009 - outside Harrods, but after selling the Knightsbridge store in 2010 he switched the site to Craven Cottage.
It was not popular with some supporters of the West London club but Al Fayed said any fan who did not appreciate it could "go to hell".
Jackson was a guest at Craven Cottage in April 1999 and watched the 2-0 victory over Wigan in League Two.
Before the unveiling, Al Fayed said: "Michael Jackson was truly a legend, a term used too often in this modern world saturated in the hyperbole surrounding celebrity.
"He was my friend, a man with whom I shared many happy memories and who died a tragic and untimely death."
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