The private owner of the estate recently placed the sign at the entrance near the Lyell Highway and closed off another entrance to the north, causing a stir on a Facebook group of former residents of Tasmanian Hydro towns.

The 121-hectare Tarraleah has been in private hands since 2005 with a handful of remaining houses used as accommodation, along with the chalet. The former newsagents and supermarket is now the reception and information centre, and the old hall is used for backpacker-style accommodation.

It was a functional town from the 1930s until the 1990s for Hydro workers.

Ray French worked for Hydro for decades, including 10 years at Tarraleah, and other members of his family had a strong connection with Hydro.

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He said the private road sign would discourage travellers from visiting Tarraleah and learning about the town's history and seeing the picturesque waterfall.

"Tasmania's booming for tourism, but if you were a new person to the state and driving past Tarraleah and you see the private road and no access sign, you'd drive past, you'd miss the history," he said.

"There's a lot of people that are chasing history like this, going from place to place from the mainland.

"My belief is that they shouldn't be able to control the people coming in and out for those reasons - the heritage, and the bushwalking.

"We see it as taking away the atmosphere from what the place used to be."

Posts and comments on the Facebook group indicated that his concerns were shared by other former residents of Hydro towns, including Tarraleah.

Others believed the owners had the right to protect their private property from non-paying visitors.

Tarraleah Estate general manager Rachel Draheim said the sign was added to clarify access issues.

"We have been undertaking a lot of maintenance to the road and at the same time have put up new signage, partly to advise guests that it is now one way in and out, but also to reduce those persons who used the Estate as a through road," she said.

Ms Draheim said Tarraleah had undergone changes since it was purchased in 2005, and "is a much different place now".

"Tarraleah Estate is a beautiful place, but like all hotels it is only open to our guests and those using the cafe," she said.

"Tarraleah Estate is not open as a free public attraction."