A red alert allows authorities in the states to restrict celebrations and gatherings to a minimum.
"These steps are critical as we begin to see worrisome early signs of increasing cases in Nigeria," Mustapha said in a statement.
Mustapha said there was potential for wider spread of the virus during the Eid-el-Kabir gatherings and said Friday prayers should be held outside local mosques.
He also suspended Durbar, an annual Muslim festival in northern Nigeria, which is marked by colourful horse riding events watched by large gatherings.
Last week, Nigeria, which has recorded 169,329 cases and 2,126 deaths said it expected to receive nearly 8 million additional doses of COVID-19 vaccines by the end of August, including from a U.S. government donation.