Russian President Dmitry Medvedev began talks Friday with Chancellor Angela Merkel at a government guesthouse, Meseberg Palace, north-west of the German capital Berlin, DPA reported.
Their two days of talks were expected to cover international efforts to obstruct Iran's nuclear research programme as well as deteriorating security in Afghanistan as the Taliban and western troops battle for the upper hand.
Russia and other permanent members of the UN Security Council - the US, China, France and Britain - plus Germany have been calling for sanctions against Iran over its rejection of international demands to suspend its uranium enrichment programme.
Merkel was also expected to brief the Russian leader on German plans to end the crisis in the euro zone and bolster the single currency.
Germany is readying major budget cuts to wind back its annual fiscal deficits.
Russia has been eager for German help to modernize the Russian economy and has been appealing for the European Union to remove a requirement that Russian nationals obtain visas before travel into the EU.
Medvedev was to spend the night in the government guesthouse. The two sides were not expected to disclose what happened at the talks before Saturday afternoon.
Merkel and Medvedev's meeting comes ahead of a Group of 20 (G20) summit of leading economies in Toronto, Canada, later this month, where financial-markets regulation will be a central issue.