The decision would hit its premium volume by about 10 million euros annually, it said in a statement.
"Due to the political situation in Iran Munich Re has decided to not renew existing business or write any new business with insurance companies there," it said.
Siemens last month said it would wind down business with Iran but had found few followers among German companies despite mounting pressure to sever links over the Islamic Republic's sensitive nuclear work.
German insurance association GDV said earlier on Thursday that an intensification of sanctions against Iran was understandable and that its members would support the tightening effort.