The 38-year-old, who came to Germany in late 2014 as an asylum-seeker, was arrested on Saturday in Saarbruecken, close to the French border. He is accused of collecting money to be used by him or someone else to carry out murder.
Prosecutors accuse him of contacting someone in Syria "who he knew was in a position to obtain IS money for terror financing" last month via the Telegram encrypted communication service. The suspect allegedly asked for 180,000 euros so that he could buy and repaint vehicles that he intended to fit out with explosives before driving them into crowds.
The Syrian is alleged to have told the financier that each vehicle would cost 22,500 euros, and that 400 to 500 kgs of explosives would be placed in each car, they added.
Police said in a separate statement that the man had sought IS financing for an "as yet substantiated attack scenario with the help of prepared vehicles in Germany, France, Belgium and the Netherlands."
Investigators have found no evidence that he already had vehicles fitted out to conduct attacks. Police said that a search of his apartment turned up no evidence of any concrete danger to New Year's Eve celebrations.
Germany saw three attacks last year claimed by IS and carried out by asylum-seekers - two in Bavaria in the summer, in which the assailants were killed and a total of 20 people wounded, and the December 19 truck attack on a Berlin Christmas market in which 12 people were killed.