The pilot of the other Eurofighter Typhoon jet was able to eject safely and survived.
Defense Minister Ursula von der Leyen said three unarmed fighter jets left their base in Laage, near the Baltic sea port of Rostock, shortly before 2 p.m. (1200 GMT).
"After about 20 minutes, there was an aerial collision between two Eurofighters, with fatal consequences," she said.
"One pilot was recovered alive, but the second pilot was dead when he was found," said von der Leyen. "We share in the grief of the relatives."
Eyewitness videos showed the burning planes falling from the sky and later, two plumes of smoke rising from the ground.
Firefighters were deployed to extinguish fires from the wreckage. Police warned the public not to approach potentially dangerous debris at the site.
Monday's collision was the first fatal crash involving a German Eurofighter, the military said.