In a letter to Facebook's European subsidiaries, Justice Minister Heiko Maas suggested a meeting with company executives on September 14 to talk about "improving the effectiveness and transparency of your community standards".
Facebook's German unit agreed to meet Maas, saying in an email sent to AFP it "takes his concerns very seriously".
"We are very interested in an exchange of views with Minister Maas about what society, companies and politicians can do together against xenophobia spreading in Germany," the email said.
The Internet giant "works hard every day to protect people on Facebook against abuse, hate speech and bullying", the company spokesman said.
In his letter to Facebook Maas wrote that in connection with the xenophobic attacks on refugees and refugee centres the Justice Ministry has received numerous complaints from concerned citizens over racist pronouncements on the internet.
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"Facebook users especially complain that your company has not taken effective action despite concrete indications of xenophobic and racist 'posts,'" read Maas' letter.
When post of this nature are reported users often only receive a reply saying that the post was checked but that it did not contravene the site's community standards guidelines, the letter went on.
But detailed explanation, that would indicate a thorough check of the post's content "is, according to the information I have, not given in these particular cases," Mass wrote.
Facebook is obligated by law to delete content which is anti-constitutional such as posts of a racist nature, Maas reminded the company.
As Germany faces a record influx of refugees and a backlash from the far right, social media like Facebook have seen an upsurge of hateful, xenophobic commentary.
Recently internet users in Berlin and Bavaria have been handed fines for posting hate speech online, and a public TV anchor made an impassioned plea for the public to argue against racist social media comments.
Satirical newspaper Der Postillion mocked Facebook's moderation policies this week with an article titled "We would delete hateful comments, but there are almost never nipples in them".