"The confluence of the holiday, the march and the device is inescapable, but we are not at the point where we can draw any particular motive," said Frank Harrill, special agent in charge of the Spokane FBI office.
The suspicious backpack was spotted by three city employees about an hour before the parade was to start Monday, Harrill said. They saw wires and immediately alerted law enforcement, who disabled it without incident, he said.
The discovery before the parade for the slain civil rights leader raised the possibility of a racial motive in a region that has been home to the white supremacist Aryan Nations.
Spokane Mayor Mary Verner said the attempted bombing was unacceptable.
"I was struck that on a day when we celebrate Dr. King, a champion of non-violence, we were faced with a significant violent threat," Verner said. "This is unacceptable in our community, or any community."
The Spokane region and adjacent northern Idaho have had numerous incidents of anti-government and white supremacist activity during the past three decades.
The most visible was by the Aryan Nations, whose leader Richard Butler gathered racists and anti-Semites at his compound for two decades. Butler was bankrupted and lost the compound in a civil lawsuit in 2000 and died in 2004.
In December, a man in Hayden, Idaho, built a snowman on his front lawn shaped like a member of the Ku Klux Klan holding a noose. The man knocked the pointy-headed snowman down after getting a visit from sheriff's deputies.
Harrill decried the planting of the bomb as an act of domestic terrorism that was clearly designed to advance a political or social agenda.
"The potential for injury and death were clearly present," he said of the bomb.
CBS News security correspondent Bob Orr reports the device appeared to be fairly sophisticated; a pipe bomb with additional metal to act as shrapnel, and a remote detonation device.
The bomb was planted, reports Orr, to send the brunt of the blast directly toward those participating in the parade.
The FBI received no warnings in advance and did not have a suspect, Harrill said. No one has claimed responsibility for planting the bomb.
The federal agency has offered a $20,000 reward for information leading to an arrest and conviction in the case.