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.
The third pilot saw two parachutes descending to the ground, indicating pilot ejection mechanisms were triggered after the crash in Germany's Mecklenburg Western Pomerania state, the defense minister reported.
"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.
The Eurofighter Typhoon was jointly developed by Britain, Germany, Italy and Spain. More than 550 of the jets have been delivered since 2003, at a cost of close to $100 million apiece.
Monday's collision was the first fatal crash involving a German Eurofighter, the military said.
Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.