Poor visibility meant the emergency medical helicopter would have been unable to land at its designated hospital.
Formula One rules dictate that cars can't take to the track without such safety provisions. Drivers are scheduled to be back behind the wheel for final practice and qualifying Saturday ahead of Sunday's race -- the second leg of the 2017 season.
"At the moment the helicopter can't land at the hospital," race director Charlie Whiting explained prior to the official cancellation of the day's second practice session.
"It looks reasonable at the circuit but they can't land in downtown Shanghai. We get news from the airport every 10 minutes."
In challenging conditions, Red Bull's Max Verstappen set the fasted lap in the first practice, 1.5 seconds ahead of Williams pair Felipe Massa and Lance Stroll. In all, just 14 of the 20 drivers on the grid clocked practice times.
Valtteri Bottas was the only driver from Ferrari and Mercedes, the top two teams so far this season, to register a lap time.
Ferrari's Sebastian Vettel beat three-time champion Lewis Hamilton at the season's opening race in Australia two weeks ago
. If a Mercedes car fails to win this weekend, it would be the first time the team has gone two consecutive races without winning since August 2014.
An improved forecast for Saturday has scheduled dry weather and sun, but rain is again expected to fall the night before the race.
F1 bids farewell to Malaysia
Meanwhile, the Malaysia Grand Prix is to be dropped from the racing calendar.
Malaysia has been an F1 destination for 19 years, and will be replaced by the returning French and German races for the 2018 season.
"It's always sad to say goodbye to a member of the Formula One family," said Formula One's commercial chief Sean Bratches.
"Over nearly two decades, the Malaysian Formula One fans have proven themselves to be some of the sport's most passionate supporters."
The Sepang International Circuit, which has been hosting races since 1999, was funded by the Malaysian government to increase the growth of motorsport in South-East Asia.
But after struggling to attract crowds and generate profit in recent years, Liberty Media, F1's governing body, has decided that this year's Malaysia GP on October 1 will be its last.