The developments came as Deputy Prime Minister Yalcin Akdogan wrote on Twitter, "Those who are publishing figures referring to our supreme Prophet are those who disregard the sacred." Such a move is "open incitement and provocation," he added.
Turkey is home to 82 million people, 99.8% of whom are Muslim, according to the CIA World Factbook.
The French satirical publication Charlie Hebdo's new cover contains what it calls a caricature of the Prophet Mohammed holding a sign saying "Je suis Charlie." The caption says "All is forgiven" in French.
It comes a week after Islamist terrorists killed 12 people at the paper's offices.
Police went to the offices of Istanbul newspaper Cumhuriyet and blocked off traffic around it after the paper published excerpts from the Charlie Hebdo issue.
Armored police blocked the entrance and stopped distribution trucks at the printing press in Istanbul, the secular daily said.
The prosecutor's office then stopped the blockade, possibly because it did not know the image was inside the paper, according to the report.
Cumhuriyet included a four-page sample of Charlie Hebdo's latest edition, translated into Turkish. That sample, which the prosecutor's office saw, did not include the cover, the paper said.
But inside the paper, two columnists had included small images of the cover with their columns, the paper reported.
An editorial in the newspaper said the drawing on the Charlie Hebdo cover did not seem to have "anything to do with Prophet Mohammed. That drawing is a symbol of a humane and conscientious attitude and it says, 'All is forgiven.'"
Cumhuriyet editor-in-chief Utku Cakirozer explained on Twitter and on the newspaper's website that Cumhuriyet "has lost writers to terror attacks" and "understands the Charlie Hebdo massacre very well."
People called the Cumhuriyet offices on Wednesday issuing death threats, employees told CNN.
Three protesters were arrested in front of Cumhuriyet's offices, CNN Turk reported.