The number of newcomers in 2014 climbed to 10.9 million, the federal statistics office reported, as Europe's top economy continues to outperform many of its neighbours.
Last year there were 16.4 million people of foreign origin living in Germany, or one in five residents. Most -- 56 percent -- have German citizenship.
Germany long resisted calling itself a country of immigration, and only began collecting statistics on its migrants in 2005.
In 2012, it became the second biggest magnet for foreigners worldwide after the United States, according to the Organisation for Economic Co-operation and Development (OECD).
However the number of migrants from outside the EU continued to surge too, particularly from China, war-ravaged Syria and India.
The report comes amid a charged debate in Germany about new legislation to regulate the flow of immigrants and asylum seekers.
Germany's ageing population poses a threat to its long-term prosperity and it hopes to confront the problem by luring highly qualified immigrants.
At the same time, the country is taking in record numbers of refugees fleeing war, persecution and poverty, expected to number 500,000 this year.
"What is clear is that we cannot solve the problem of a lack of skilled labour via asylum law," Chancellor Angela Merkel's chief of staff, Peter Altmaier, told Monday's Bild newspaper.
Horst Seehofer, the head of the Christian Social Union (CSU), the Bavarian sister party of Merkel's Social Democrats and a member of the ruling coalition, warned against opening the door to more migrants.
"An immigration law that would lead to more immigration to Germany is out of the question for the CSU," he told public broadcaster ARD.
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