The operation, led by the London Borough of Newham's planning enforcement team, saw a pair of smoking cafes pulled down in Plashet Grove in East Ham.
The council said it had issued enforcement notices to the brothers who built the lounges and officers had gone to warn the leaseholders, but they still failed to comply.
The final warnings were issued in July, and on Tuesday 28 October the council entered the properties to remove furnishings and begin pulling the buildings down.
Ian Corbett, Newham Council's mayoral advisor for environment and leisure, said: "In Newham we have a zero tolerance approach to Shisha lounges.
"These illegal establishments have been built without planning permission and caused significant disturbance to other residents, so they were razed to the ground by Newham Council.
"These premises have shown blatant disregard for residents’ and clients’ safety, and health. The Shisha lounge buildings were a hazard to all and much of the smoking took place in poorly ventilated areas.
"What made these men think they were above the law is beyond me, let this be a warning to others trying to skirt around planning laws to make a quick buck, Newham Council will be checking you have the correct planing permission and licences and if needs be, we will come after you with bulldozers and legal papers too."