Fox Hunt, one of the favourites for the $1m Dubai Gold Cup, broke down as its leg snapped on the first circuit of the track during the Group Three race.
The fatally-injured horse could not be moved, and with the other horses rapidly coming around the track for the second lap an organisers' car caught up with other runners to call the race off and warn the riders to slow down.
Fox Hunt's jockey Silvestre de Sousa was uninjured.
"I feel fine," de Sousa said. "His leg just snapped and I clipped heels as I went down."
Fox Hunt, part of the Godolphin stable owned by Dubai's ruling family, was tipped as a future star of the racing world after excellent performances at both the Goodwood Cup and the Melbourne Cup in recent months.
Godolphin's top jockey Frankie Dettori, riding in the same race on stablemate Opinion Poll, praised organisers for their quick thinking to halt the race.
"It would have been a disaster if they'd have carried on," he said. "Thank God they had officials in the car to tell us."
The Gold Cup had originally been the third race on the card, and organisers announced that it was to be re-run at the end of the night.
However the repeat was not without incident with Bronze Cannon put down after suffering a leg injury and Grand Vent becoming the third victim of the ill-fated race after he shattered a right hind pastern.
The race was won by Dettori on Opinion Poll.
Saturday evening's showpiece race, the $10m Dubai World Cup, was won by Fox Hunt's stablemate Monterosso. The nine races on the card make up the most lucrative day in the sport, with a total prize fund of $27m.