The book is believed to be worth 8 million euros ($11 million), a police official said.
The theft took place between Monday and Tuesday morning at the Picasso Museum, removed from a glass case that "can only be opened with a specific instrument," the Culture Ministry said.
A museum employee discovered the notebook missing Tuesday morning from the second-floor display case, the police official said anonymously, as police are not authorized to discuss cases publicly. The museum is closed on Tuesdays.
There was no surveillance system in the room where the notebook was displayed, the police official said.
The stolen sketchbook, shiny red with the word "Album" inscribed in gold on the front, dated from 1917 to 1924, the Culture Ministry statement said. It measured 6.3 inches by 9.5 inches (16 by 24 centimeters).
The Picasso Museum, in Paris' old Marais neighborhood, is dedicated to the Spanish-born painter, a founder of the Cubist movement and leading 20th-century artist.
In August 2007, French investigators recovered two Picasso paintings and a drawing worth a total of more than $66 million stolen from the home of the artist's granddaughter in an overnight heist six months earlier. Two of three suspects later arrested were carrying the rolled-up canvases as police closed in. Police had been tipped off by an art dealer after the theft at the luxury Paris apartment of Diana Widmaier-Picasso and suspected the thieves were looking to sell their loot.
One of the paintings, "Maya and the Doll," shows Widmaier-Picasso's mother as a young girl in pigtails. The other recovered painting, "Portrait of Jacqueline," depicts Picasso's second wife, Jacqueline Roque.
In 1994, seven Picasso paintings worth an estimated $44 million were stolen from a Zurich gallery. They were recovered in 2000, and a Swiss man and two Italians were jailed for the theft. The stolen paintings included Picasso's "Seated Woman," and "Christ of Montmartre," which had been stolen from the gallery once before, in 1991.
The market for stolen art is valued in the billions of dollars annually.