The inauguration will take place at Karzai's fortress-like presidential palace in Kabul, and is to be attended by US Vice-President Dick Cheney and Defence Secretary Donald Rumsfeld.
Cheney is the most senior US official to visit Afghanistan since US backed forces overthrew the Taliban in late 2001.
Karzai, leader of a transitional government established after the fall of the Taliban, easily won a 9 October presidential election which went ahead smoothly despite Taliban threats to spoil the poll.
Mulla Dadullah, senior military commander and member of the 10-member Taliban council, said by satellite phone on Monday that Afghans should avoid potential government and military targets during Karzai's swearing in.
"We do not want to harm innocent people," he said, adding that Taliban fighters had been given orders to disrupt the ceremony if they had a chance.
There is an 18,000-strong US military force hunting Taliban and al-Qaida suspects in the south and southeast of Afghanistan, while more than 8000 Nato-led peacekeepers are stationed in Kabul and the north of the country.
Dadullah refused to say how the Taliban planned to attack, but said the aim was to remind foreigners that Muslim fighters were against the "occupation" of Afghanistan.