People who do not fit the biological definition of male or female can now choose the category "diverse" on official documents.
Those choosing the option will need a doctor's certificate to register.
Intersex people are born with both male and female sex characteristics, which can appear at birth or later in life.
Other countries have approved laws in recent years to help recognise intersex people.
Austria's constitutional court made a similar ruling to Germany's in June, while Australia, New Zealand, Malta, India and Canada have all passed measures to redress issues facing intersex citizens.
Germany previously allowed intersex people to opt out of choosing either male or female as a gender in 2013.
But in 2017 the country's top court ruled it was discrimination to deny people a gender, after a person registered as female had a chromosome test confirming they were neither sex.