New rules will see street workers limited to just three streets in the town notorious for its liberal attitude to prostitution, said regional broadcaster Saarbrücker Rundfunk on Wednesday.
"Until now street prostitution has been allowed on a total length of 547 kilometres [of streets]. Under the new restricted zone it will be only slightly over two kilometres," said mayor Charlotte Britz as she presented the plans.
Saarbrücken, which made international headlines with plans for Europe's biggest brothel last year, has been battling with a tide of sex tourism from nearby France.
In December, when France changed the law to penalize prostitutes' clients with a fine of over €1,500, the town began to fear a surge in customers travelling over the border to Germany where prostitution is legal.
There are now an estimated 1,000 sex workers in a town of 180,000 - more prostitutes per head on average than there are doctors. Until now, accosting customers on the street had been allowed in the whole town apart from a small area in the city centre.
A working group of town and state officials are planning to restrict street-walking to three streets to allow police to keep a closer eye on the business.
Prostitutes will also only be able to stand on the streets during hours of darkness - in winter from 8pm and in summer from 10pm, operating until 6am the next morning.
The new rules are expected to come into force in the spring if approved by the Saarland state cabinet next week.
Britz, an advocate of re-criminalizing prostitution in Germany, hopes tighter rules will be introduced nationwide and is calling for the legal age limit for prostitutes to be raised to 21 from 18.
Germany legalized prostitution in 2002 after lawmakers decided attempts to eliminate it were doomed to failure and that it would be better if the women involved were able to make social security payments, enjoy health cover and work in a safer environment.
The law has come under fire recently from critics who argue that legalization has largely benefited pimps and brothel owners.