Authorities suspect that the man was “planning an act of terrorism” which could have had an Islamist motive.
According to information obtained by DPA, the 27-year-old suspect had planned to detonate an explosive device at the town festival in Eisenhüttenstadt and had Salafist sympathies.
A police spokesperson said that explosive substances were found in the man's apartment, which has been under investigation.
"There are suspicions that an explosive attack was being prepared," said a spokeswoman for the regional government of Brandenburg.
The festival in the small town of 30,000 inhabitants on the Polish border is set to take place between August 26th and 28th.
Two attacks in Bavaria in July with apparent Islamist motives shocked Germany and led to calls for a reappraisal of security laws.
In one incident, a 17-year-old attacked passengers on a train near Würzburg with an axe, severely injuring four of them. The adolescent was later shot dead by police who subsequently found an Isis flag and other Islamist apparel in his bedroom.
Six days later, a 27-year-old Syrian man blew himself up while detonating a bomb outside a cafe in nearby Ansbach.
The Federal Office for the Protection of the Constitution, Germany's internal spy service, believes there are more than 43,000 people in the country who are involved in the Islamist scene.
The intelligence agency says numbers have been on the rise in recent years with a marked increase in the size of the Salafist scene, a particularly conservative form of Islam.