India, July 11 -- A centuries-old bonfire tradition in Northern Ireland has come under renewed scrutiny after a replica mosque was set alight during an annual loyalist celebration in County Tyrone, prompting a police investigation, political condemnation and renewed concerns over rising anti-Muslim sentiment.

The incident took place in the village of Moygashel during the annual Eleventh Night bonfire celebrations, a tradition dating back more than 300 years that commemorates the 1690 Battle of the Boyne, when Protestant King William III defeated the Catholic King James II.

The bonfire featured a replica mosque erected atop a large stack of wooden pallets.

The structure included an effigy holding what appeared to be an ISIS flag, alongs...