"In means in and out means out," Wolfgang Schäuble said, adding that British Prime Minister David Cameron in February negotiated a "very good deal for the UK" with the EU.
The accord, which Cameron is using as the keystone in his campaign for Britain to vote to remain in the EU, "confirms a special status for the UK and one that demands a lot from EU member states", said the German finance minister.
"But in contrast to what some are saying, this is the only deal on the table, there will be no renegotiations," said Schäuble.
"An 'out' vote cannot and will not be used as leverage to get a better deal. If the UK votes in, the deal begins immediately. If it votes out, then the exit process begins."
Britain is to hold a closely-watched June 23 referendum on whether or not it should stay in the 28-nation bloc, and opinion polls are showing that the nation is still largely undecided on the issue.
While making clear that the decision lies with Britons alone, Schäuble said: "I think both the EU and UK are better served with Britain remaining. I say this not only as a life-long European but also as a man used to making pragmatic decisions based on level-headed analyses."
Schäuble acknowledged that Britain has been a "force for constant change in the EU".
"Thanks partly to the British, the EU has less wasteful agricultural and fishery policies, a liberal single market, a commitment to free trade and 28 member states," he said.
"Without the UK, the EU will be less liberal, less efficient and less influential on the world stage," said Schäuble.
And while Britain would still have a special relationship with the EU, even if it left the bloc, those links "should not be defined by splendid isolation but by splendid integration".
Separately, European Commission chief Jean-Claude Juncker warned Britain that it cannot hope to share in the bloc's advantages if it decides to leave.
"Those who leave the table should not be allowed to eat at the table," he told a forum organised by German broadcaster WDR.