The spoof ads appeared last week on a satirical blog called Metronaut. Several of the ads were based on actual posters from the 1936 Berlin Olympics, which Adolf Hitler used to showcase Nazi Germany to the world.
City officials issued demands via lawyers on Monday to remove their logo and names from the ads.
Metronaut's co-founder, John F. Nebel, says the ads were meant to spark a discussion about the darkest chapter in Berlin's history.
City spokesman Bernhard Schodrowski said Tuesday that Berlin would address the Nazi issue "appropriately" if it beats Hamburg to become Germany's Olympic candidate on March 21.