"This little grenade is a warning to (Croatian president) Ivo Josipovic and (Serbian president) Boris Tadic" the influential Vecernji List daily said, quoting a threatening letter that allegedly accompanied the grenade.
The letter contained a series of insults directed at the two leaders, who have made reconciliation with their Balkans neighbours a priority, the paper said quoting German sources close to the investigation.
The parcel with the grenade was recovered on Monday just two days before Josipovic's was due to arrive for a three-day visit in Germany. The country has a large Croatian diaspora community and has always had good ties with Zagreb and was among the first countries to recognise its independence from Yugoslavia in 1991.
An embassy spokesperson said on Monday that the letter, written in Croatian, had been handed over to German authorities and was received in a courier package sent from Germany.
The authors of the letter, that had an insignia and was signed with initials HF, also vowed to "avenge" a Croatian policeman, whose killing 20 years ago by rebel Serbs, was an incident that heralded the 1991-1995 war.
No leads yet
"Nothing can stop us" from getting revenge the letter said.
Meanwhile, the Jutarnji List daily reported the threats were sent by an extremist Croat group known as Hrvatski Feniks (HF) meaning Croatian Phoenix.
Berlin police said they had no leads yet on possible suspects or motives for the incident.
Josipovic's visit to Germany will go ahead as planned, his office said. He is due to have talks with Chancellor Angela Merkel on Thursday.
Ties between Croatia and Serbia gradually improved since the end of the 1991-1995 war. During the conflict Belgrade regime politically and militarily backed Serbs who opposed Croatia's independence from the former Yugoslavia.
Relations between the former foes have notably improved since Josipovic took over in early 2010, as he, like Tadic, pledges reconciliation in the war-torn Balkans region.
During the past year the two leaders have visited several massacre sites in Croatia and Bosnia and paid respect to the victims.