On the sidelines of his Vietnam visit in Hanoi, Westerwelle said the clashes in Yemen compelled the German government to withdraw all personnel. He also called on all German nationals to leave the country as soon as they could do so safely.
Only a small number of embassy staff were still working in Yemen, and the number of German citizens in the country was estimated at 30.
Yemen has experienced weeks of heavy fighting between opposition members and security forces loyal to President Ali Abdullah Saleh, who has refused to step down.
On Friday, Saleh was injured in an attack on his residence. Seven people were reportedly killed in the violence, which the president blamed on a rival clan.
Saleh has also ignored calls by neighbouring Arab states to sign an agreement to resign in exchange for immunity from prosecution.
Westerwelle said Berlin has been following the situation in the capital Sanaa and across the country with growing concern. "We have called for an orderly political transition and a peaceful social dialogue," he said.
"The human rights abuses committed in Yemen recently are not acceptable," the foreign minister said. "The German government utterly condemns any use of violence."