Asked by a journalist if Erdogan is building "an autocracy or even a dictatorship" through the reform, Schaeuble replied: "One can read the constitutional draft that way.
"And if one follows the developments in recent years, then one can find several reasons or analyses (on this)...But yes, these are signs that are simply worrying," he added during the live interview organised by German weekly Spiegel.
Turkey votes on Sunday on whether to scrap the prime minister's post and empower the president to appoint ministers.
Erdogan pushed for the reforms at a giant rally last Saturday, arguing it would give the country more stability and power.
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Ahead of the vote, Ankara has been locked in a bad- tempered row with several EU countries, including Germany, after numerous authorities blocked Turkish politicians from campaigning on the continent in favour of the vote.
Ankara has said such efforts at thwarting Erdogan's ministers were reminiscent of Nazi Germany and also raised alarm over what it sees as rising racism and Islamophobia.
The row is another problem weighing on already strained ties between Germany and Turkey.
The two NATO allies have been tangled in a series of disputes related to last July's failed coup against Erdogan and a subsequent crackdown on alleged conspirators.
Turkey's arrest of a correspondent for German newspaper Die Welt has also sparked outrage.
Schaeuble noted that Berlin had originally been working with Ankara to help boost Turkey's economy but the detention posed a roadblock.
The journalist, Deniz Yucel, was jailed in February on terror charges and is awaiting trial.
The German consul in Istanbul, Georg Birgelen, last week made the first consular visit to Yucel since his detention on February 14.