Earlier, Merkel had criticized Russia for jailing three members of Pussy Riot for staging a protest against Putin inside a cathedral.
Putin claimed one Pussy Riot member, prior to the Moscow cathedral protest, had demanded that the city "should be gotten rid of" Jews.
"Does [Chancellor Merkel] know that previously one of [the Pussy Riot activists] hung an effigy of a Jew and said that these people should be gotten rid of?" Putin said. "You and I cannot support those who take an anti-Semitic stance. And I ask you to take that into account too."
The group that organized the 2008 stunt, underground anarchist art collective Voina, said Putin is misrepresenting the protest.
In fact, the group said, the protest was an attack on intolerance. It was targeting the policies of then Moscow Mayor Yury Luzhkov, who took a hard line on fringe groups, illegal migrants, and homosexuals.
Pussy Riot members Nadezhda Tolokonnikova and Yekaterina Samutsevichto are said to have taken part in that protest.
Tolokonnikova and Maria Alyokhina were found guilty along with Samutsevich of hooliganism motivated by religious hatred.
Tolokonnikova and Alyokhina are serving two-year prison sentences at penal colonies, while Samutsevich was given a suspended sentence on appeal.