The anniversary has a complex legacy in Germany, where right-wing extremists have tried to use the devastating Allied air raids to play down Nazis war crimes.
In a speech at Dresden's Palace of Culture, Steinmeier sought to strike a balance between remembering the 25,000 people who died, while stressing Germany's responsibility for the war.
Steinmeier warned against the "political forces" that sought to "manipulate history and abuse it like a weapon".
"Let's work together for a commemoration that focuses on the suffering of the victims and the bereaved, but also asks about the reasons for this suffering," he told an audience that included Britain's Prince Edward.
Steinmeier later joined thousands of residents in forming a human chain of "peace and tolerance".
As in past years, neo-Nazis were gathering in Dresden to hold "funeral marches" for the dead. The far-right AfD party meanwhile set up an information booth to tell the supposed "truth" about the bombings and demand a grander memorial for the victims.
Hundreds of British and American planes pounded Dresden with conventional and incendiary explosives from February 13 to15 in 1945.
Historians have calculated that the ensuing firestorm killed some 25,000 people, leaving the baroque city known as "Florence on the Elbe" in ruins, and wiping out its historic centre.
The devastation came to symbolise the horrors of war, and was the at the centre of Kurt Vonegut's acclaimed novel Slaughterhouse 5. (AFP)