"What possibly awaits us here is something like a new intifada," said foreign ministry spokesman Martin Schaefer.
"That can't be in anyone's interest — it can't be something anyone in Israel wants, or which any responsible Palestinian politician wants.
"That's why it is... so important to search for ways and means to resume talks in order to reach a permanent solution."
Schaefer said Berlin was "seriously concerned about the escalation of violence that has claimed several lives again in Jerusalem and the West Bank at the weekend".
"We condemn in the strongest terms the abhorrent knife attacks on Israeli bystanders in Jerusalem on Friday" which had killed two people and wounded three, he said.
He said Berlin also condemned any "acts of vengeance against innocent Palestinian civilians".
Since Saturday, Palestinian youths and Israeli forces have clashed in the West Bank and some east Jerusalem neighbourhoods, in scenes reminiscent of the intifadas or uprisings that started in 1987 and 2000.
Netanyahu is scheduled to arrive on Thursday in the German capital for talks with Chancellor Angela Merkel.
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