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Mr Schroeder told a joint news conference: "We want a really substantive new start in our relations".
The two countries' relationship soured because of Russia defaulting on its foreign debt following its 1998 financial crisis, Russian actions in Chechnya and tensions over Nato involvement in Kosovo.
Their first session focussed on economic co-operation.
Germany is Russia's biggest creditor and both sides are keen to make progress in restructuring Moscow's payments.
Mr Putin is hoping to persuade Germany to write off some of Russia's huge debts.
 Russia fears a new arms race with the new US missile defence system |
"We consider Germany to be at the core of European integration. As such, [the talks have] double significance," he said.
Mr Putin, who once served as a KGB agent in Germany and speaks German, will also address German business leaders to attract foreign investment.
The two leaders are also expected to discuss the US proposal to build a new national missile defence system, which Russia opposes and Germany is wary of.
Russia has instead called for a joint Russia-Nato defence initiative.
A BBC correspondent in Berlin says the visit has also been overshadowed by questions about Mr Putin's approach to democracy following the arrest of the Russian media magnate Vladimir Gusinsky for embezzlement.
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