Police told AFP searches at the three-day "Rock am Ring," held near the southwestern city of Koblenz were over. Live music resumed at 1:30 pm (1130 GMT).
Some 90,000 people are expected to attend the event which ends on Sunday.
"After a series of intensive searches across the site the fears of an imminent danger were not confirmed," the organisers said.
"The police gave the go-ahead" for the festival to restart, they said.
The festival was evacuated on Friday evening after Koblenz police said they were in possession of "concrete elements, in the light of which a possible terrorist threat cannot be ruled out".
Police said three people suspected of being members of a Salafist group in the neighbouring state of Hesse were detained but released on Saturday.
"One person who is not of German origin and is known to the police as having links to the Islamist terror network had access to" backstage areas, police spokesman Wolfgang Fromm said.
The three had been hired to set up security barriers at the venue.
In a statement, police in the city of Coblenz said they were in possession of "concrete elements, in the light of which a possible terrorist threat cannot be ruled out."
"As safety is the key priority and any danger to festivalgoers has to be avoided as much as possible, a decision has been taken to suspend the festival for today," the statement said. There were no further details.
Security for the festival had already been stepped up, with an additional 1,200 staff, in response to the May 22nd Manchester bombing which occurred after a concert by US singer Ariana Grande.
The region's interior minister Roger Lewentz defended the decision to evacuate the festival, saying: "We cannot take risks."
Last year's Rock am Ring programme was curtailed by violent storms in which dozens of people were injured by lightning.
The country remains on high alert after a jihadist attack on a Christmas market in Berlin on December 19th.
Anis Amri, a 24-year-old Tunisian, hijacked a truck, killed its Polish driver and ploughed the vehicle through the market, claiming 11 more lives andwounding dozens.