The device was uncovered on Friday at a pharmacy just off the Christmas market in central Potsdam, a picturesque city near 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 and 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 inside.
Investigators are now attempting to identify the sender of the package.
The market was only partially evacuated on Friday and will reopen as normal on Saturday with a stronger police presence, the spokesman said.
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 killing another 11 people and wounding dozens more by ploughing the heavy vehicle through the market. 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.