Around 200 rounds of new 7.65 caliber ammunition was found in Spandauer Damm, close to the festivities at Charlottenburg Palace, Berlin.
Hundreds of officers rushed to the scene, which is also near a mosque, as sniffer dogs were also called in.
Ammunition has been examined and German authorities are attempting to find DNA traces.
More riot police were sent to the market at the nearby Charlottenburg Palace.
Police spokesman Winfrid Wenzel said it remains “unclear” as to who the ammunition belonged to, and what it would be used for.
The spokesman also said the incident is not being treated as terror related.
He said: ”Ammunition is always being found in Berlin.
“Somebody was probably clearing their cellar out and found something from their grandfather.”