Authorities in the Veneto region said the event would end later on Sunday, two days earlier than scheduled.
Italy has by far the highest number of coronavirus cases in Europe, with 152. Three people have died.
Italy has imposed strict quarantine restrictions in two northern "hotspot" regions close to Milan and Venice.
About 50,000 people cannot enter or leave several towns in Veneto and Lombardy for the next two weeks without special permission. Even outside the zone, many businesses and schools have suspended activities, and sporting events have been cancelled including several top-flight football matches.
In neighbouring Austria, authorities denied entry to a train travelling from Italy after it emerged that two passengers had fever symptoms. The train was on its way from Venice to Munich, but is currently being held on the Italian side of the Brenner Pass.
Elsewhere, authorities in South Korea and Iran are battling to control rising numbers of infections. South Korea has raised its coronavirus alert to the "highest level".
The new strain of coronavirus, which originated last year in Hubei province in China, causes a respiratory disease called Covid-19. China has seen more than 76,000 infections and 2,442 deaths.
Italy’s Prime Minister Giuseppe Conte announced on Saturday that "extraordinary measures" would come into force to try to stem the rising number of coronavirus cases.
He said the quarantine restrictions could last for weeks.
Police, and if necessary the armed forces, will have the authority to ensure the regulations are enforced.
Angelo Borrelli, the head of Italy's Civil Protection Department, told reporters that 110 of the confirmed cases were in Lombardy, with 21 in Veneto with others in Emilia-Romagna and Lazio.
Officials reported a third death on Sunday, an elderly woman from the town of Crema suffering from cancer.
Italian officials say they are still trying to trace the source of the outbreak.
The Venice Carnival had been due to close on Tuesday but regional president Luca Zaia told Sky TG24 television on Sunday that it would be suspended, along with other events, in a bid to combat the virus.
"From this evening, we plan to stop carnival and all sporting activities until 1 March," he said.