Only one MP voted against and another abstained, as parliament approved overwhelmingly by a show of hands the resolution titled "Remembrance and commemoration of the genocide of Armenians and other Christian minorities in 1915 and 1916".
In the public gallery of the Bundestag, people held up banners saying "thank you" as the parliamentary speaker announced the result of the vote to applause.
Armenia Foreign Minister Edward Nalbandian praised the decision as "Germany's valuable contribution not only to the international recognition and condemnation of the Armenian Genocide, but also to the universal fight for the prevention of genocides, crimes against humanity."
"The German parliament's recognition of 'distorted and groundless' allegations as 'genocide' is a historic mistake," Deputy Prime Minister and government spokesman Numan Kurtulmus said on Twitter, calling the resolution "null and void."
Ahead of the vote, Ankara had warned that the vote was a "test of friendship".
The resolution, put forward by the ruling left-right coalition and the opposition Greens, carries the contentious word throughout and also puts partial blame on the German Empire, then allied with the Ottomans and which failed to prevent the atrocities.
The "genocide" recognition comes at a particularly awkward time as Germany and the European Union are relying on Turkey to help stem a record influx of migrants even as tensions are rising between both sides over human rights and other issues.
Acknowledging Turkey's fury over the Bundestag move, political leaders argued however that a clear recognition of historical facts was a key step to healing old wounds.
"We are not looking to put Turkey in the dock. Instead, this is about making clear that taking responsibility for the past is indispensible for reconciliation," said Franz Josef Jung, speaking for Chancellor Angela Merkel's Christian Democrats.
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