Three German soldiers were killed and five seriously injured on Friday in a clash with Taliban rebels in northern Afghanistan, a military spokesman said.
The soldiers were on a mine clearing operation near the town of Kunduz when they came under attack from around 100 Taliban, military sources told the German Press Agency dpa.
The attack took place in Chardarah, the most restive of the six districts that make up Kunduz province, said a spokesman at the German operational headquarters in Potsdam near Berlin.
It was the highest number of casualties the postwar German armed forces, the Bundeswehr, have suffered in battle and brought to 39 the number of German soldiers killed in Afghanistan to 39.
The Germans were operating together with Afghan troops and other members of the NATO-led International Security Assistance Force (ISAF) when the attack took place.
A German patrol came under sustained fire from the insurgents near the village of Eisakhel, said Abdul Wahid Omarkhel, the district chief in Chardarah.
The fighting lasted for several hours and many houses in the village were destroyed, locals said.
The three soldiers who died were shot by the rebels. The injured soldiers were in an armoured vehicle that apparently ran over a mine while taking evasive action, the military sources said.
The dead and injured were evacuated by NATO helicopters to the German base in Kunduz.
Mullah Adel, a Taliban spokesman in the province, said the Taliban forces destroyed two tanks and killed 20 soldiers. He said two of the attackers were injured. Taliban claims are often inflated.
German Chancellor Angela Merkel expressed shock at what she called "a despicable and underhanded attack on our soldiers in Afghanistan."
Defence Minister Karl-Theodor zu Guttenberg broke off his holiday in South Africa on hearing the news and made plans to return to Germany.
German Development Aid Minister Dirk Niebel was in Afghanistan at the the time, visiting to the German military headquarters in the northern city of Mazaar-i-Sharif. He called the attack "shameful."
Germany has around 4,500 troops in the country, making it the third largest supplier to the NATO-led security mission, behind the United States and Britain.
Most of the German troops operate in provincial reconstruction teams, helping to build up Afghanistan's infrastructure, but have increasingly been subject to attacks.
Three soldiers died in June last year when there armoured vehicle overturned while trying to escape an attack in the Kunduz region.
The deaths are likely to rekindle the debate about the military presence in Afghanistan, which is deeply unpopular with the German public.
Earlier Friday, the head of Germany's Lutheran Christians warned that the mission to Afghanistan risked losing its legitimation, and said Germany must avoid becoming a long-term occupying force in the region.
"The conflict in Afghanistan has gone out of control," Nikolaus Schneider, the acting head of Germany's Evangelical church, said in an interview released in advance of publication Saturday.