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The BBC's Stephen Evans in Berlin says the capital's airports have closed
However traffic is returning to normal in other parts of northern Europe, a day after about 500 flights were cancelled across the region.
The Grimsvotn volcano, which erupted on Saturday, seems to have stopped spewing ash, an Icelandic official said.
The cloud forced the closure of Bremen and Hamburg airports in the early hours of Wednesday. Traffic at Berlin's airports was halted at about 1100 (0900GMT).
An estimated 700 flights out of 8,000 on a normal day will be cancelled in Germany, Europe's air traffic control body Eurocontrol said in a post on its Twitter page.
The cloud could also affect parts of Poland but there are no flight restrictions elsewhere in Europe, Eurocontrol said.
German Transport Minister Peter Ramsauer told public television ARD: "Security is the top priority but we can say that the situation will get better later today."
The country's transport authorities have taken a tough view on the potential dangers posed by the ash, says the BBC's Stephen Evans in Berlin.
There has been no outright criticism of the decision from German airlines, but there is unease in the industry that Germany's rules regarding flying through volcanic ash are different from the rest of Europe, our correspondent says.
The head of the country's airport organisation said Europe-wide rules were needed.
Larger particles France's civil aviation authority has said it expects very little disruption to air traffic and was not expecting to close any of the country's airspace.
Air traffic in Norway, Denmark and the UK was disrupted on Tuesday, with Scotland, Northern Ireland and northern England especially badly hit.
But Britain's weather service said the concentration of volcanic ash in UK airspace would decrease significantly over the course of Wednesday.
The volcano began erupting last Saturday, sending clouds of ash high into the air. But it appears to have stopped emitting ash at 0200 GMT on Wednesday, said Hrafn Gudmundsson of the Icelandic Meteorological Office said.
Experts say the eruption is on a different scale to that of the Eyjafjallajokull volcano last year, when millions of travellers were stranded amid concerns about the damage volcanic ash could cause to aircraft engines.
European Union transport commissioner Siim Kallas said: "We do not at this stage anticipate widespread airspace closure and prolonged disruption like we saw last year."
Icelandic President Olafur Grimsson told the BBC: "The eruption is gradually being diminished and the ash cloud is definitely smaller than it has been so we are pretty optimistic now."
The ash particles from Grimsvotn are larger than those from Eyjafjallajokull, and so fall to the ground more quickly.
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