The Grande Braderie de Lille attracted 2.5 million visitors last year and had been due to be held on 3-4 September.
Lille's mayor, Martine Aubry, said cancelling the event had been a "painful decision" but there were "risks we cannot reduce".
It is among several events dropped since the lorry attack in Nice in July.
More than 80 people were killed in the resort city when the Tunisian driver ploughed his vehicle into celebrating crowds on Bastille Day, in an assault claimed by so-called Islamic State.
Most of the victims died at the time of the attack, but the authorities in Nice said a man had died on Thursday from his injuries, taking the total of those killed to 85.
Twelve days after the Nice killings, on 26 July, two French jihadists of Algerian origin killed a priest in his church in a suburb of Rouen.
Michel Lalande, the top government official in the Lille region, said the flea market would have presented a security risk because of its "hyper-urban format with its streets full of people".
He added: "There comes a time, despite our passions and our convictions, when we have to say stop."
One of Europe's biggest flea markets, in the northern French city of Lille, has been cancelled because of security fears after recent Islamist violence.