The celebrations are a major tourist draw and income source for Nazareth, which is populated primarily by Arab citizens of Israel - two-thirds of whom are Muslims and one-third of whom are Christians, the Times added.
Christmas celebrations are still happening in Nazareth, believed to be the hometown of Jesus Christ, even though President Donald Trump's decision to recognize Jerusalem as the capital of Israel angered the mayor this week.
"Our identity and faith aren't up for debate", said Salam on Thursday. "The decision [by Trump to recognize Jerusalem] has taken away the joy of the holiday, and we will thus cancel the festivities this year". Yet the president has managed to dampen the Christmas spirit on the other side of the world with his offensive, widely panned decision on Jerusalem.
However, this year's Christmas market and festival will not take place as Muslim groups continue to protest Trump's decision.
He framed the move as a response to President Donald Trump's statement acknowledging Jerusalem as the capital of Israel.
Reuters reports that Nazareth isn't the only town to protest the move; within an hour of the announcement, the Palestinian towns of Bethlehem, Jesus's traditional birthplace, and Ramallah in the Israeli-occupied West Bank briefly switched off their Christmas lights in protest.More news: Huddersfield look to upset Chelsea
"Today we finally acknowledge the obvious: that Jerusalem is Israel's capital", Mr Trump said in a speech in the White House last week.
At a little over 30 per cent of the population, Christians are a significant minority - but are dominated by the Muslim majority which voted Salam into power.
He did not mention Trump's Jerusalem announcement in these later remarks.
Earlier this month, Trump made his controversial decision to move the USA embassy to Jerusalem, overturning years of American policy.
Benjamin Netanyahu, the Israeli Prime Minister, welcomed Trump's decision as "a new and genuine milestone in the glorious history of this city".
Israeli fighter jets also bombed Hamas targets in Gaza, officials said, after militants fired rockets from the region towards Israeli territory. Israel's I-24 News also reported this move. "This shows the world that Jerusalem as the capital of Israel is not up for negotiation, and America is and shall always remain a loyal ally of Israel".