The England Under-21s squad head to Czech Republic in June, after an impressive qualifying campaign in which Sterling played a key part during the early stages.
But the Liverpool forward, 20, has become a regular in Roy Hodgson’s senior squad over the last year as well as proving one of the key players at Anfield, so Southgate feels he may benefit from a rest.
Raheem Sterling's last game for the Under-21s was against San Marino in November 2013
"Realistically, Raheem has become a very important player for the senior team and for Liverpool," said Southgate, speaking on a visit to St. Augustine’s Primary School in Middlesbrough on Thursday.
"There is a huge demand on him. Part of my role is looking at the development of individuals and I'm not convinced another tournament in the summer would be right for him.
"Of course he is a super player and, from a selfish point of view, it would be easy to try and grab all of those.
"But we have to look at the bigger picture."
However, Southgate also revealed that there could be a door opening for another rising star of Merseyside in the shape of Everton’s Ross Barkley.
He has yet to play for the Under-21s under Southgate’s charge and has also been a regular in Hodgson’s squads over the last 12 months or so.
But with the 21-year-old having missed a chunk of this season through injury and now returning to action, the opportunity of the Under-21 tournament might be an opportunity for him, if Southgate, Hodgson and Toffees boss Roberto Martinez can come to an agreement.
Ross Barkley was part of Hodgson's squad for the World Cup
"Ross is interesting, as we haven't had a chance to work with him yet," added Southgate.
"He is someone myself and Roy will talk about. I will also talk to Roberto Martinez, who I get on with very well.
"But the boys who have got us to this point are a tight group and I have to think about the dynamic."
Southgate was in Middlesbrough to speak about his side’s game with Germany at the Riverside Stadium on Monday 30 March.
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