Russia said it would stop the German channel being broadcast in the country and start proceedings that would declare it a "foreign agent," a designation that carries a negative Soviet-era connotation.
The Russian foreign ministry also said it would bar entry to Russia for German officials involved in the move to ban RT DE.
Claudia Roth, Germany's minister for culture and media, said the move against Deutsche Welle was unacceptable and called on Russia "not to abuse RT's licensing problems for a political reaction".
"Clear de-escalation steps are needed in the mutual relationship," Roth said in a statement.
Germany's MABB media watchdog and Commission for Licensing and Supervision (ZAK) of media institutions said this week that RT DE could not broadcast in Germany using a Serbian licence, a decision that angered Russia.
In a statement on its website detailing its retaliatory measures, Russia's foreign ministry described the German move as "unfriendly".
The row comes amid wider tensions with the NATO military alliance over Ukraine that are an early test of political relations between Germany and Russia after German Chancellor Olaf Scholz took office in December.
The Kremlin said earlier on Thursday that a trip by Scholz to Moscow was on the agenda but that a date was not yet confirmed.
State-funded Deutsche Welle said it formally protested against the move and would take legal action.
"We are being made a pawn here in a way that media only have to experience in autocracies," Deutsche Welle Director Peter Limbourg said in a statement.
Hendrik Wuest, premier of North Rhine-Westfalia state where Deutsche Welle is headquartered, called Russia's action "a massive and deliberate attack on the freedom of press, which we strongly condemn".
German journalist association DJV called on Russian President Vladimir Putin to immediately lift the ban on Deutsche Welle.
"There is no justification for this drastic censorship measure," DJV chair Frank Ueberall said in a statement.
The announcement on Deutsche Welle comes amid a crackdown on media outlets that Russia considers "foreign agents".
It uses the term to designate foreign-funded organisations it says are engaged in political activity.
