"I can only give the urgent advice to be open and truthful and lay things on the table," he told the foreign press association when asked about Germany's relations with Iran in light of international concerns about its nuclear program.
"The threats that would present themselves with a continued nuclear program for military use, if there ever was one, are very, very large and very, very worrying.
"Thus, my urgent appeal (is) to cooperate fully to clear up this matter with the relevant atomic energy authority and to hide nothing, nothing at all."
Schroeder said Iran was obligated to cooperate with the International Atomic Energy Agency (IAEA) and that Germany had complete faith in its director, Mohamed ElBaradei, to conduct a fair investigation.
He cited a European Union statement last month expressing its "growing concern" about the nature of Iran's nuclear program and warning that, without credible guarantees, it would review its economic ties with Tehran in September.
"We are interested in having good relations with Iran, but we also say clearly that we completely support the position that the European foreign ministers have formulated on the atomic question," Schroeder said.
Iran has come under increasing pressure, notably from Washington, to sign an additional protocol to the nuclear Non-Proliferation Treaty allowing snap inspections of its nuclear facilities.
Concern over the issue resurfaced this week when a UN report said that inspections at Iranian facilities had turned up two different types of highly-enriched nuclear particles not needed in civilian atomic programs.