Putin made his comments after Merkel made clear she saw the two-year sentences the women were serving for a raucous protest against him in a church as excessive.
"Does she know that before that, one of them had hung an effigy of a Jew and said Moscow needed to get rid of such people?" he told Merkel and other German and Russian delegates at a forum held as part of the Chancellor's visit to Moscow. "We cannot support people taking anti-Semitic positions."
The remarks prompted satire and criticism on social media, with some bloggers and backers of Pussy Riot suggesting he was deliberately twisting the truth to serve his argument.
Putin appeared to be referring to a mock execution staged in a Moscow-area supermarket in 2008 by an activist group called Voina (War), in which at least one of the women, Nadezhda Tolokonnikova, took part.
Activists dressed to look like non-Slavic migrant workers and other minority groups hung from rafters in an aisle. Some online references to the protest characterized one of them as a Jew.
Pyotr Verzilov, Tolokonnikova's husband and a founder of Voina, said the performance was meant to draw attention to bias in Moscow against minority groups.
"The main question is whether some Putin aides misinformed him - either accidentally or on purpose - or he is aware of the facts and is deliberately misinforming Angela Merkel," Verzilov said.
Putin made similar comments a second time when asked about the remarks at a press conference with Merkel after their talks.
A popular Russian blogger who goes by the name Drugoi posted a message addressed to Merkel saying that Putin "deliberately, or by some unfortunate misunderstanding, misled you".
(Additional reporting by Gabriela Baczynska and Denis Dyomkin; Editing by Pravin Char)
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