It comes after a string of drone sightings near airports and military sites in Denmark and Norway in recent days.
Suspicion has fallen on Russia, even if no definite proof has been made public. Moscow has rejected suggestions that it was behind the Danish incidents.
In the German incident, the drone "swarm" was spotted Friday over the northern state of Schleswig-Holstein, which borders Denmark, Interior Minister Alexander Dobrindt told a press conference.
While drone sightings have been growing in Germany since Russia's invasion of Ukraine, such swarms had not occurred before, he said.
He did not give further details about what sites the drones were overflying, or who was responsible, but Berlin has long accused Russia of carrying out espionage and surveillance operations.
"We are seeing a constant hybrid threat," Dobrindt said.
Dobrindt had already announced earlier this week plans to strengthen the country's drone defences, part of broader push to build up the armed forces following Russia's invasion of Ukraine.
On Saturday he confirmed that he wants to revise air safety laws to allow the "shooting down of drones" by the armed forces.
"What we are witnessing is an arms race -- an arms race between drone threats and drone defence. We must prepare ourselves for this," he said.
Currently police have the main responsibility for defending against drones and changes were needed, he said.
Tabloid Bild reported that dowing drones by the military would only be permitted in certain circumstances, such as if they pose a serious danger to human life or critical infrastructure.
Germany, one of Ukraine's key backers in its fight against Russia, had so far been reluctant to shoot down drones for fear that debris could cause casualties.
The GdP police union voiced opposition to Dobrindt's plan, telling the Rheinische Post newspaper that domestic security was the responsibility of the police, not the military.
Drone warfare has been a core feature of the Ukraine conflict and NATO countries bordering Russia hope to build a "drone defence wall" -- a network of technological and military solutions to counter these aerial threats.
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