Brexit is expected to "seriously damage business" with the UK, according to the survey of 2,200 internationally operating German companies. Almost 10% of firms that have invested in the UK plan to move their money out of the country, the DIHK said.
Smaller firms with revenues of between €10 million and €50 million per year and those that import goods from Britain are most pessimistic, it said.
Britain is the third-biggest export market for Germany after the US and France, buying €86 billion worth of goods in 2016. Around 750,000 German jobs are dependent on these exports, the Association said.
The 2,500 branches of German firms in the UK employ around 400,000 people, while British companies with branches in Germany employ about 220,000 staff, the DIHK said.
Asked what the priorities should be in negotiations between the UK and the EU, almost 88% of firms said they hope that free movement of goods will remain in place.
The next priority was to prevent an increase in bureaucracy, at 83%, while 67% asked for free movement of capital and payments. Just under half of businesses want free movement of people between the EU and UK after Brexit.
DIHK president Eric Schweitzer said: "Brexit will seriously harm the business of German companies with the United Kingdom."
However, negotiations must not damage the single market as a whole when trying to retain UK business, he said: "That would be an even bigger problem for our international companies."
Munich-based Florian von Baum of Pinsent Masons, the law firm behind Out-Law.com said: "It is very difficult to anticipate what will happen. We have seen that most predictions made after the Brexit vote have not or not yet materialised; so I would be cautious with such general statements. There is, however, some undeniable logic that Germany as an export country would suffer from more protectionism. This applies not only for trade relations to the UK, of course. We can only hope that the Brexit negotiations will consider this."