The meaty treats, often eaten three to a roll in Saxony, would be part of an advertising push for the Eastern state's many tourist attractions.
But the "That's the Saxon way" (So geht Sächsisch) campaign has raised Bavarian hackles.
"You're not allowed to give away goods for free" without special permission, market organizer Helmut Nordhardt told the Nürnberger Nachrichten.
And stallholders are up in arms at the prospect of having to compete with free giveaways at one of their busiest times of year – especially from out-of-state sausages.
A spokeswoman for the Saxon state government in Dresden said on Wednesday that they hadn't intended to cause such a fuss or undermine merchants' business.
The plan was originally intended to publicize speciality Saxon mustard from Bautzen under the motto "We bring spice into your life. Wherever you're from."
A small number of sausages garnished with the delicacy would have been grilled and given away in the city centre.
It's not yet known whether the wily Saxons will deploy their guerilla mustard marketing somewhere else in the city to seduce their cousins to the southwest.