Rights groups say that the activists, including Steudtner, were in Turkey to attend a digital security workshop for activists when the group was detained in a police raid earlier this month.
Foreign Minister Sigmar Gabriel also cast doubt on the future of government export guarantees for German companies' investments in Turkey.
She added: "The German government and I would of course defend German companies from totally unjustifiable and incomprehensible accusations".
The rapidly escalating situation affects two North Atlantic Treaty Organisation allies that are mutually dependent.
Germany's DIHK chambers of commerce said that in the current environment investing in Turkey was hard to imagine.
Amid tensions between Ankara and Berlin, analysts voice concerns over the fate of a deal on refugees reached between the European Union and Turkey.
German-Turkish relations have been souring for over a year, particularly since last July's coup attempt in Turkey.
Six people, including German human rights consultant Peter Steudtner and Amnesty International's country director, Idil Eser, are awaiting trial in Turkey for allegedly aiding a terror group.
Gabriel said Germany had revised its travel advice in the wake of the recent arrests including German national Peter Steudtner.
Many companies have also been seized on allegations of links to terrorism.
"We need our policies towards Turkey to go in a new direction. we can't continue as we have done", Gabriel told reporters in unusually direct language touching on sensitive commercial matters including corporate investment guarantees. "We need to be clearer than we have been until now so those responsible in Ankara understand that such policies are not without consequences", Gabriel told reporters. It said the main reason behind the crisis was the "double standards" in Germany's stance on Turkey. "This is an escalation that we couldn't have predicted and a bitter one for all involved".
The head of Europe's top human rights body says he has discussed a variety of human rights issues with Turkey's prime minister and expressed concerns over the pre-trial imprisonment of six activists in Turkey. It was also the second biggest source of Turkish imports, at $21.5 billion.
Turkey's Foreign Ministry has accused Germany of "blackmail and threats" and said it would not make concessions concerning the independence of its judiciary.
"Our relations can not be pursued based on blackmail and threats but through internationally accepted norms and principles", the Turkish Foreign Ministry said in a statement, accusing German Foreign Minister Sigmar Gabriel of a "one-sided and distorted approach".
Social Democratic Party leader Thomas Oppermann had said the Chancellor must "finally" speak out against the arrests and charges.
Separately, Thursday's edition of Handelsblatt reported that a list was handed to the Federal Criminal Office containing "dozens" of companies including Daimler AG and BASF SE that are accused by Turkey of supporting terrorism.
The relations started deteriorating rapidly after Turkish officials were not allowed to hold rallies in Germany aimed to shore support for Erdogan's controversial referendum, which would provide more powers to the President.