On Friday, organizers said there were "adverse weather conditions and, in particular, snow on the stage route in its entirety."
The 19th stage in the 21-leg race had already been altered because of avalanche threats and sub-zero temperatures. With snow and ice predicted, the Gavia and Stelvio passes were cut from the route. However, a longer 160-kilometre (100-mile) route from Ponte di Legno was set to be climbed to the original finish of Val Martello.
The altered route was to go over the Tonale pass, which was also snowed over.
"The organizers have put the security of riders first and the UCI supports their decision," said Pat McQuaid, president of the international cycling federation. "The riders have been racing in very difficult conditions this week, but today those conditions are just too extreme."
Nibali, an Italian who rides with Astana, holds a 4:02 lead over 2011 Tour de France winner Cadel Evans of Australia, who rides for BMC. Rigoberto Uran of Colombia is third overall, 4:12 behind.
"It seems like a fair decision," Uran said. "Being this cold it's really impossible to bike."
Nibali boosted his lead by winning Thursday's mountain time trial.
The 20th stage on Saturday was supposed to be another arduous leg but some of the major climbs have been removed, although the altered route will still begin in Silandro and finish with an uphill climb to Tre Cime di Lavaredo. It will now follow a 210-kilometre (130-mile) route, slightly longer than previously scheduled.
The race ends on flatter ground in Brescia on Sunday.