The news comes just days after a Chinese official said there was no need to panic over escalating tensions.
The US official, who wishes to remain anonymous, said it was not clear whether the meeting would be rescheduled.
They said: “The tension is escalating, and that could prove to be dangerous to both sides.”
The official said it was also not clear whether the cancellation was because of the numerous recent conflicts between Beijing and Washington DC on issues like trade and military action in the South China Sea.
The US and China have been stepping up the trade war in recent months, imposing added tariffs on each other’s imports.
The islands in the South China Sea, occupied by Beijing, are disputed and have been claimed by a number of nearby countries.
However, the US has taken the tensions regarding the dispute to a new high by “asserting their right” to sail warships close to the islands.
Two US officials claim the USS Decatur, a guided-missile destroyer, sailed within 12 nautical miles of reefs near the Spratley Islands in the sea.
The Chinese government’s top diplomat Wang Yi said on Friday there was “no cause for panic” over fears of the growing friction between the two powers.
He added China would not be blackmailed or yield to pressure over trade.
At a UN Security Council meeting this week, President Donald Trump accused Xi Jinping’s regime of seeking to meddle in the November 6 congressional elections in attempts to stop a Republican win.
Mr Wang dismissed the charge.
The incident with the US warship in the South China Sea mirrors a similar confrontation last month when a British vessel passed by the Paracel Islands.
A Royal Navy spokesman said: “HMS Albion exercised her rights for freedom of navigation in full compliance with international law and norms.”
China reportedly sent a frigate and two helicopters to meet the British ship, although there was no aggression between the two.
The islands in the South China Sea are uninhabited but are of strategic importance and multiple nearby countries believe they rightfully belong to them – a combination of Brunei, Malaysia, the Philippines, Taiwan, Vietnam and China.
President Donald Trump has repeatedly used aggressive rhetoric towards China in rallies and speeches since his Presidential campaign.
He has promised US workers that increased tariffs will bring jobs back to the American people.