Germany has banned all Iran-backed Hezbollah activity on its soil and designated it a terrorist organisation, the Interior Ministry said on Thursday.
Police also conducted early morning raids on mosque associations in four cities across Germany. Security officials believe up to 1,050 people in Germany are part of Hezbollah's extremist wing.
Israel and the United States had been pushing Germany to ban the organisation. Germany had previously distinguished between Hezbollah's political arm and its military units, which have fought alongside President Bashar al-Assad's army in Syria.
A spokesman said Interior Minister Horst Seehofer had banned the activities of Hezbollah.
"Even in times of crisis, the rule of law is capable of acting," tweeted the spokesman.
Hezbollah activity
A heavily armed Shi'ite Islamist group already designated a terrorist organisation by the United States, Hezbollah is also a significant backer of the government of Lebanese Prime Minister Hassan Diab, which took office in January.
Jewish groups hailed the move as a landmark decision.
"This is a welcome, much-anticipated, and significant German decision," said American Jewish Committee head David Harris.
"We now hope other European nations will take a close look at Germany's decision and reach the same conclusion about the true nature of Hezbollah," said Harris.
The EU classifies Hezbollah's military wing as a terrorist group, but not its political wing.
Last December, Germany's parliament approved a motion urging Chancellor Angela Merkel's government to ban all activities by Hezbollah on German soil, citing its "terrorist activities" especially in Syria.
On a trip to Berlin last year, U.S. Secretary of State Mike Pompeo said he hoped Germany would follow Britain in banning Hezbollah. Britain introduced legislation in February of last year that classified Hezbollah as a terrorist organisation.
Police raided four mosque associations in Dortmund and Muenster in the western state of North Rhine-Westphalia, Bremen and Berlin which they believe are close to Hezbollah, the interior ministry said.