The event, which was to begin at 1650 IST, was called off following a tip by "reliable state security sources", police said in a statement.
"Police request all visitors not to go to the planned parade route or not to make the trip to Braunschweig in the first place," the statement said.
Police chief Michael Pientka told public broadcaster NDR there was no link between the cancellation and two fatal attacks in Copenhagen yesterday, which had come little more than a month after Islamist attacks in Paris that left 17 people dead.
More than 4,000 participants in fancy dress march down a six-kilometre route through the city.
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The decision to call it off was taken by Mayor Ulrich Markurth and the parade's marshal, Gerhard Baller.
"This is a sad day for our city," Markurth told NDR. "The assessment of the police however left us with no other choice."
Last month, Germany's biggest carnival procession, in the western city of Cologne, banned a float paying tribute to the slain cartoonists of French magazine Charlie Hebdo due to security fears.
The carnival committee said that it backed the message of the float defending free speech and freedom of the press.
But it had received "messages from concerned locals which we take seriously", though organisers admitted there was "no indication" from the police of a credible terror threat.