The DON'T FORGET ABOUT US singer "really wanted to open the show with her choir-backed rendition of WE BELONG TOGETHER," according to the New York Daily News.
Madonna reportedly threatened the event's producers, saying she would boycott the show unless they gave her the prime opening spot.
They eventually agreed to the diva's demands, despite her album CONFESSIONS ON A DANCE FLOOR not even being nominated for an award.
A source says, "The producers noted that Madonna is a five-time (Grammy) winner," while Carey has only scored two Grammy's so far.
Madonna will open the show tonight (08FEB06) with a dance extravaganza, which also features animated British group Gorillaz.
Fuelling speculation about the spat, it has emerged that neither Madonna nor Carey will walk the red carpet at tonight's event.