"US President Trump's recent giant military contracts which Gulf monarchies raise the risk of a new spiral in arms sales," Gabriel warned in an interview with the Handelsblatt daily to appear on Wednesday.
"This policy is completely wrong and is certainly not Germany's policy," he added, in extracts of his interview released Tuesday.
"I am very concerned with the dramatic escalation and the consequences for the whole region," Gabriel continued.
Saudi Arabia and allies including Egypt, the United Arab Emirates and Bahrain announced on Monday they were severing diplomatic relations and closing air, sea and land links with Qatar.
They accused the tiny Gulf state of harbouring extremist groups and suggested Qatari support for the agenda of Saudi Arabia's regional arch-rival Iran.
Energy-rich Qatar has long had strained ties with its neighbours but the move by Riyadh and its supporters shocked observers, raising fears the crisis could destabilize an already volatile region.
The dispute comes less than a month after Trump visited Saudi Arabia and called for Muslim nations to unite against extremism.
Trump on Tuesday backed the regional efforts to isolate Qatar, supporting Saudi Arabia and its allies and suggesting that the key US ally - home to the largest American airbase in the Middle East - has been funding extremism.
During his recent visit to Saudi Arabia, Trump signed arms contracts worth $110 billion with Riyadh.
Gabriel warned against completely isolating Qatar and said the move is an attack on the Gulf state's very existence.
"Such a 'Trumpification' of relations in a region already susceptible to crises is particularly dangerous," Gabriel said.
He added that the nuclear deal agreed with Iran in 2015 had allowed just such an escalation to be avoided.
"A toxic conflict between neighbours is that last thing we need," Gabriel warned.
He will meet his Saudi counterpart Adel al-Jubeir in Berlin on Wednesday.