The second case within days of alleged US spying in Germany on Wednesday threatened to further strain transatlantic ties already frayed by the NSA surveillance scandal.
German authorities said police had searched the Berlin-area home and office of a man who, local media reported, is a German military employee accused of passing secrets to the United States.
The case follows Friday's news that a 31-year-old German BND intelligence service operative had been arrested, suspected of having sold over 200 documents to the CIA.
The documents reportedly included papers on a German parliamentary panel probing the activities of the US National Security Agency (NSA), whose targets have included the mobile phone of Chancellor Angela Merkel.
Merkel's government has refused to comment on the specifics of the two cases while investigations continue, but has made clear its anger and sense of betrayal to its decades-old strategic ally the US.
"Espionage is a very serious accusation," said Merkel's spokesman Steffen Seibert, while also highlighting the "profound disagreement" between Berlin and Washington on the balance between civil rights and security.
Officials involved in the latest case consider it "more serious" than that of the alleged BND mole, according to a report by the daily Sueddeutsche Zeitung and two public broadcasters.
The federal prosecutors office confirmed only that "police officers have since this morning searched the residential and office premises of an accused in the Berlin area due to preliminary suspicion of intelligence activities".
The defence ministry said that an internal "investigation is ongoing".
'Oil on the fire'
Merkel's intelligence services coordinator late on Tuesday spoke by phone with CIA chief John Brennan, the chancellor confirmed, and a senior foreign ministry official on Wednesday met for a second time in five days with US ambassador John B Emerson.
While both sides stressed that the US envoy had initiated the latest meeting, the foreign ministry said it had "made vividly clear how important it is in our view that the US government actively and constructively participates in clearing up the accusations".
A foreign ministry spokesman also said that the distraction of the spying accusations came at a time when "the international community faces a whole series of problems", from the Ukraine crisis to Iran nuclear talks and the Mideast conflict.
Merkel said early this week that the BND double agent case, if true, would be "a clear contradiction as to what I consider to be trusting cooperation between agencies and partners".
And foreign minister Frank-Walter Steinmeier told a newspaper that "it would be most disturbing if the spying merrily continued while we're looking at the NSA wiretapping activities and have set up a committee in parliament".
Politicians across party lines have voiced similar sentiments, while a Greens opposition lawmaker reiterated a call for Germany to grant safe haven to Snowden, who has been in hiding in Russia.
Emerson acknowledged in a speech on Tuesday that "we must acknowledge that the German-American relationship is now undergoing a difficult challenge".
News of the alleged BND mole has "poured more oil on to public fires... already burning over the revelations by Edward Snowden about US surveillance in Germany", wrote Jackson Janes of the American Institute of Contemporary German Studies.
He noted that in the German public discussion "references to the experience of the Nazis as well as the East German secret police are pervasive".
He said the US had since the 9/11 attacks reactivated and expanded its Cold War-era "surveillance infrastructures" in Germany, and that "those resources were also shared with the German intelligence services on many occasions".
"Right now, the ball is in the US court to respond to both allegations and concerns in Germany," Janes wrote. "While Germans cannot wish away the causes and needs for tools for intelligence, the United States cannot ignore the outrage and resentment currently pulsing through the German public."