Authorities did not say when the planned attack was supposed to take place or which market was the target, though said they believed it to be one in the Dingolfing-Landau area, north east of Munich.
German newspaper Bild reported the Egyptian man was an imam at a mosque in the area.
Police said the Moroccan men – aged 30, 28 and 22 – were arrested accused of having agreed to commit murder, while the Syrian man, a 37-year-old, was accused of encouraging the suspects “in their decision to commit the crime”.
The five suspects appeared before a magistrate on Saturday and remain in custody.
Joachim Herrmann, Bavaria’s state interior minister, told Bild the “excellent cooperation between our security services” had helped to prevent “a potentially Islamist-motivated attack”.
Christmas markets are popular festive attractions throughout Germany, frequently attracting large crowds and significant tourism.
Security at events has been increased in recent years, since an attack in Berlin in 2016 when a man drove a lorry into a market crowd, killing 12 people.
