The top diplomat in Germany's new centre-left government is set to meet right-wing Prime Minister Naftali Bennett and Foreign Minister Yair Lapid later.
A visit to the Holocaust memorial Yad Vashem in Jerusalem was first on the agenda for Germany's top diplomat, who has been in office since December.
Baerbock laid a wreath in memory of the six million Jews murdered by Nazi Germany in World War II.
Before leaving for Israel, Baerbock had said that Germany "stands by our special historical responsibility for Israel's security and will continue to make contributions in solidarity for this."
According to the German Foreign Ministry, Baerbock will also meet Palestinian President Mahmoud Abbas and Foreign Minister Riad Malki in Ramallah in the West Bank.
The peace process between Israel and the Palestinians has been stalled since 2014, although it will form part of the discussions, the ministry in Berlin said.
Bennett opposes the establishment of a Palestinian state and has vowed to build more housing for Jewish settlers.
Along with most European governments, the German government and Baerbock's Green Party strongly support a two-state solution for the peace in the region and criticise Israel's settlement building on occupied Palestinian Territories.
New areas of cooperation when it comes to fighting climate change are also to be explored during Baerbock's trip, Berlin said.
After her visit to Israel and the Palestinian Territories, Baerbock will fly on to Jordan.
On Saturday, she will be in Egypt. Egypt will host a UN Climate Change Conference next November.
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