About 200 people cheered Putin as he walked in front of the 18th-century Zwinger Palace, Dresden's baroque masterpiece fully restored after Allied firebombing during World War II.
"You're a great president," shouted Achim Brumbach, who handed Putin flowers and got an autograph in return.
With his wife watching, Putin kissed the hand of Dresden resident Sylvia Rodrian, who gave him a candy he promptly ate before a lunch with Chancellor Gerhard Schr?der.
Putin has warm memories of Dresden, an important cultural capital still recovering from wartime bombing.
"It is a special pleasure to be here," he told a reception for local dignitaries. "I lived and worked here for five years, and for me it's like coming home. Many things have changed, but not the local hospitality."
Despite such fond memories, officials said Putin would not meet former colleagues. "It's because these old friends are old KGB or Stasi and you can't take them to such a reception," Saxony spokeswoman Barbara Hintzen said of his main social gathering of the day.
Putin had lunch in a beer hall, the kind of place he came to love in Dresden even if it meant an expanding waistline. "We had come from a Russia where there were lines and shortages, and in East Germany there was always plenty of everything," he said in his memoirs. "I gained about 25 pounds."
His German tour included talks in Berlin focusing on international terrorism and meetings with business leaders in western Germany on Wednesday.
He won praise for offering to help the U.S.-led "war on terrorism" and saw signs that the West would ease its criticisms of the Chechnya campaign.
In Dresden, only a few criticized Putin, who has charmed many during his visit with his excellent German.
"Putin has to answer for the war in Chechnya," said Conny Wittig, 22, who carried a banner outside the Zwinger Palace.
But few said they were bothered by his KGB past. "The main thing is what he is doing today," said Lena Yesipovich, an ethnic-German immigrant from Russia. "What Russian does not have something in their past?"
During his years as a KGB spy, Putin worked diligently in East Germany and kept a low profile, winning a few minor awards. Intelligence experts say recruiting agents and gathering information in the East-West Cold war struggle was a central focus of Major Putin's work in the small KGB branch.
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