NASA says the flight was called off two hours and 20 minutes before the scheduled liftoff.
The seven crew, including Japanese astronaut Soichi Noguchi, had already boarded Discovery.
NASA spokesman George Diller said a defective hydrogen fuel sensor was found and it could have prevented the shuttle from reaching full power during its ascent into orbit.
The sensor is one of four designed to transmit data to computers on the levels of hydrogen remaining in the main tank, to determine when engines should be shut off during the climb into orbit.
The sensor did not respond during tests before the launch from the Florida seashore space centre which had been planned for 3:51 pm (1951 GMT).
As the seven astronauts left the orbiter in their distinctive orange suits, experts gathered to try to determine why the sensor failed.
“We will not be ready to fly before Saturday,” said Wayne Hale, the shuttle program’s deputy manager. “That’s the very best scenario,” he told journalists at the Kennedy Space Centre.
But NASA administrator Michael Griffin pointed out that in a worst case scenario, the shuttle would have to be taken back to the assembly building, five kilometres from the launch pad.
The incident was the latest of several glitches ahead of the planned lift-off.
NASA had a scare yesterday when a plastic and foam protective cover fell 20 metres off one of Discovery’s windows, damaging tiles on one of the two orbital manoeuvering systems.
Experts scrambled to replace the panel containing the tiles.
Worsening weather had also jangled nerves at the Kennedy Space Centre as thunderstorms rolled in.
NASA has until the end of the month to send the shuttle into orbit so it can hook up with the International Space Station.
But there were concerns Tropical Storm Emily, now raging in the Caribbean, could eventually move toward Florida.