The Maoists had fought against the monarchy since 1996, but signed a peace deal with the government last year.
The agreement included plans to hold elections, now set for November 22, to choose a special assembly that will decide the fate of the monarchy.
But the Maoists now say Nepal must be declared a republic before the vote. They accuse the king and his supporters of trying to sabotage it.
Dinanath Sharma, a senior Maoist leader, has said the provisional parliament, which includes the former guerrillas, should declare the kingdom a republic.
The group has planned a public rally in the capital, Kathmandu, on Tuesday to announce their decision to quit the government.
The government says the move would endanger the peace deal.
Ram Chandra Poudel, the peace and reconstruction minister, said: "We have urged them [the Maoists] to reconsider their decision.
"If they leave the government, it would create a very difficult situation ahead of the election and put the peace process in a trap."
Officials said they were holding emergency meetings with the Maoists and with Girija Prasad Koirala, the prime minister, to try to resolve the issue.
Peace deal
Some analysts said the Maoists, who entered mainstream politics only recently, could be nervous about the elections and are trying to delay the vote.
Lok Raj Baral, head of the independent think-tank Nepal Centre for Strategic Studies, said there was "a widespread feeling that the Maoists have less chance of winning as many seats as will be wrested by other main parties".
He said the Maoists want to delay the polls so that they are better organised.
Under the peace deal, the Maoists and the government agreed that the first meeting of the special assembly would take a decision about the future of Nepal's centuries-old monarchy, which the Maoists want abolished.
The monarchy has lost its traditional popularity since King Gyanendra, the current monarch, took absolute power in 2005.