The Munich-based Ifo economic research institute said its business climate index fell to a weaker-than-expected reading of 104.2 from 105.8 in August.
It was the fourth straight fall for the index, based on a monthly poll of around 7,000 firms, and took the headline index to its lowest level since February 2006. Economists surveyed by Reuters had forecast a reading of 105.0.
"The first signs of brakes on growth are noticeable. Recent events on the financial markets probably also contributed to that," Ifo President Hans-Werner Sinn said.
Last month's Ifo survey, the first since fears of a global liquidity crisis hit financial markets, showed companies remained positive about current economic conditions but had taken a dimmer view of the outlook.
Last week, the Mannheim-based ZEW institute's survey of analysts and institutional investors fell sharply on continued worries about the credit squeeze caused by the US subprime crisis and concerns about the strong euro and high oil prices.
The German government has said repeatedly that the credit crunch is unlikely to have significant impact on the German economy, but worries about the euro, which touched a record high of $1.4130 on Monday, are growing.
A separate Ifo gauge of current conditions fell to 109.9 from 111.4 in August. A reading of 111.0 had been forecast.