Newspaper reports said the party for the under-40s, to be held in southern Johor state bordering Singapore, was being advertised through a website that asked for RM250 as an entrance fee.
Tourism Minister Azalina Othman told a Malaysian newspaper that if this party goes ahead it could damage the country's reputation worldwide, as it is against their culture and religion.
Party organisers had reportedly said that male guests were banned from wearing briefs to the event, while women only allowed to wear G-string panties which had to be removed after midnight.
To entice potential male participants, the organiser claimed that over 200 women, including female college students from Kuala Lumpur and Malacca had confirmed their attendance.
Johor CID chief Senior Assistant Commissioner II Amer Awal dismissed the report, but said the authorities were nonetheless on alert.
Amer said police were also tracking down those responsible for attempting to dupe members of the public into paying a deposit to take part in such a party.
He said: "We are, at this point, quite confident that this whole thing is nothing more than a con.
"Even in some Western countries, such parties are organised in secrecy. No organiser would be so bold as to try and invite potential participants through a website.
"And the fact that they are only asking for a RM250 deposit is indeed fishy. Why so cheap?"