Yunus, 77, has been at odds with Bangladesh Prime Minister Sheikh Hasina since 2007 when he made a brief foray into the country's highly polarised politics.
In 2011, he was sacked as the head of pioneering micro- lender, Grameen Bank, in a move widely believed to have been orchestrated by Hasina.
The celebrated former economics professor challenged his sacking in the highest court, but lost.
After the ouster, Yunus has been championing not-for- profit social businesses across the globe and he holds a conference for social entrepreneurs every year in Dhaka to promote innovative ideas.
But Yunus's office, which has been holding the conference for the last seven years along with its Social Business Day celebrations, has said the meet has been cancelled "due to unavoidable circumstances" .
"With a heavy heart we inform you that we are cancelling the 7th international conference organised on 28-29 July 2017 on the occasion of Social Business Day," Yunus Centre said in a statement.
The centre said about 200 international participants have already arrived in Dhaka, including Thomas Gass, an Assistant Secretary General of the United Nations, who was to be the keynote speaker.
"Police did not have have sufficient time to get prepared for such a big conference where representatives from 36 nations were to take part," Saheli Ferdous, assistant inspector general of police, told AFP.
A Yunus Centre official said they have been coordinating with the security agencies for weeks and even held a meeting with them earlier this week.
Yunus set up Grameen Bank, which co-won the Nobel prize with him in 2006, in 1983 to make collateral-free micro loans to millions of rural entrepreneurs.
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