The tower, known as the Arch of Neutrality, is topped by a 12-metre gold-plated effigy of the leader which always rotates to face the sun.
The statue is one of several of himself that he ordered to be erected throughout the central Asian nation.
Niyazov, who preferred to be called Turkmenbashi, or Father of All Turkmen, ruled the energy-rich country for 21 years.
Known for having an eccentric personality, Niyazov renamed days of the week and months of the year after himself and his parents.
He also wrote several poetry books as well as the Rukhnama -a code of moral guidelines that became required reading for schoolchildren and government officials.
In the last years of his rule, Niyazov used the country's vast energy wealth for outlandish projects including a huge, man-made lake in the Kara Kum desert and a 40-meter pyramid.
He died in December 2006 aged 66.
Berdymukhamedov, a former health minister, has softened some of Niyazov's policies and taken steps to make the government less isolated.
He has pushed for market reforms to make the economy more attractive to foreign investors and reversed some of Niyazov's most eccentric policies.
But the nation of five million people remains a one-party state with no independent news media.
Berdymukhamedov, has issued coins with his portrait and published books of his speeches.