A spokesman for Peer Steinbrück said he understood Napolitano's reasons for scrapping the meeting "given the domestic political situation in Italy."
Commenting on the inconclusive vote in Italy, Steinbrück said late on Tuesday he was "downright appalled that two clowns won."
He said that while former comedian turned anti-corruption firebrand Beppe Grillo was a "professional clown with nothing against being called that", former premier Silvio Berlusconi was "a clown with a particular testosterone surge".
Government officials such as Foreign Minister Guido Westerwelle have called on Italy to continue on the path of reform under outgoing Prime Minister Mario Monti that led to improved confidence in the financial markets.
Former finance minister Steinbrück has proved a gaffe-prone candidate as he gears up to challenge Merkel for the leadership of Europe's top economy and political powerhouse in elections on September 22.
His campaign got off to a poor start after revelations that he pocketed some 1.25 million euros ($1.64 million) for speeches at private functions.
He then caused offence when he said that Merkel gets a "bonus from women" and complained that the 17,000 euros per month that the chancellor earns is not enough.
Napolitano was due to have met Steinbrück for dinner on Wednesday and is due to meet his German counterpart Joachim Gauck on Thursday, as well as Merkel.