The device was discovered late Friday at a pharmacy just off the market in central Potsdam, a picturesque city near Berlin, reviving fears of a repeat of last year's deadly terror attack at a Christmas market in the German capital.
'Investigations are continuing in all directions,' Brandenburg state police said on Twitter. But 'according to the first element of the investigation,' it appears 'unlikely' that the Christmas market was the target, the police said.
A pharmacist sounded the alert after finding a canister with wires inside the package. After initial reports that it was an explosive device, local authorities said the cylindrical canister was filled with nails, powder, batteries and wires - as well as a powerful firework of a type not allowed in Germany - but there was no sign of a detonator.
Investigators are now attempting to identify the sender of the package.
Germany has been on high alert for possible jihadist attacks after last December's deadly assault at a Christmas market in central Berlin.
The attacker, Tunisian asylum seeker Anis Amri, hijacked a truck and murdered its Polish driver before ploughing the heavy vehicle through the market, killing another 11 people and wounding dozens more.
Four days later, while on the run, he was shot dead by Italian police in Milan.
The Islamic State group claimed responsibility for the attack, as well as several others on German soil over the last two years.