Photos of the incident quickly did the rounds on social media, sparking outrage in many quarters and support in others.
Nice is one of 15 towns that have banned the burkini, a full-length swimsuit that covers the whole body except for the face, hands and feet. It's favored by many Muslim women, but officials say the ban is a response to growing terror concerns.
The incident in Nice took place at the city's Promenade des Anglais, site of last month's Bastille Day truck attack
The photos show officers, armed with guns and batons, standing around the woman, who was lying on the beach in a blue headscarf and a matching top.
After the woman takes off her full-sleeved tunic, an officer is seen crouching beside her writing what appears to be a note or fine
Nice authorities say the police officers were simply exercising their duties. Christian Estrosi, deputy major of Nice, denounced the photos saying they put the officers in danger.
"I condemn these unacceptable provocations," he said.
Calls for national clarification
A leading French Muslim body requested an urgent meeting with the government to discuss the ban following the publication of the photos.
The French Council of the Muslim Faith (CFCM) tweeted: "Muslim women stigmatized, fine in Cannes and woman forced to withdraw her tunic in Nice: CFCM requests a meeting with (French Interior Minister) Bernard Cazeneuve."
Meanwhile, some in the French Muslim community are fighting back with their checkbook.
One local organization is helping Muslim women who were fined on French beaches. Marwan Muhammad, president of the Collective Against Islamophobia in France, told CNN that out of the 15 women they are helping, none were wearing burkinis -- only headscarves.
An Algerian entrepreneur has also stepped up, offering to pay burkini fines for any Muslim woman
Nice authorities told CNN the decree does not specifically ban the burkini itself, leaving beach patrol officers free to interpret and enforce the ban subjectively.
'We don't want you here'
This is the second incident of its kind in recent days.
A 34-year-old mother was fined 38 euros ($42) on a Cannes beach on Tuesday after she was confronted by three police officers.
She told CNN affiliate BFM TV the officers informed her she was not appropriately dressed and that she had to wear her headscarf as a bandana or leave the beach -- which she refused to do.
"I was not wearing a burkini, I was not wearing a burqa, and I was not naked. I think that my outfit was appropriate," she said.
The confrontation divided nearby beach-goers surrounding the family -- some supported her; others insulted her, she said.
"The insults were like 'Go home,' 'We don't want you here' (and) 'France is a Catholic country,'" the woman told BFM TV. "Those hurtful words were said in front of my kids. My daughter was crying. She did not understand why her mother had to leave the beach. It's the first time I faced such discrimination."