"In the current conflict situation, which does exist, there is no doubt that such a contact is necessary, because some steps or actions are often interpreted incorrectly," Steinmeier said at a joint press conference with his Russian counterpart, Sergei Lavrov, in the Russian city of Volgograd.
Steinmeier stressed that both sides had sharply increased the number of military exercises since the start of the crisis in Ukraine.
"Therefore, a 'hot line' must exist to exchange information [on military activities]," Steinmeier said.
The alliance accuses Moscow of meddling in Ukrainian conflict, while Russia denies the allegations, warning that NATO expansion will undermine regional security.
Estonia currently hosts massive NATO drills, involving about 13,000 troops.
In December 2014, the Russian Defense Ministry announced plans to conduct at least 4,000 military exercises in 2015.