Driven by the arrival of growing numbers of foreigners, Germany's population rose by 430,000 to 81.2 million last year, its biggest increase since 1992, the German statistics office said on Thursday.
German public opinion has been divided on the rising numbers of immigrants, with some warmly welcoming people fleeing conflict in the Middle East and Africa but others concerned about how easily the newcomers can be integrated.
Business leaders and the government say that migration can help to counter the effects of an ageing population and prevent a shortage in the German labor force.
A total of 7.5 million foreign citizens were living in Europe's most populous country, the figures for 2014 show.
Foreigners made up 9.3 percent of the population at the end of 2014, up from 8.7 percent a year earlier.
Those numbers do not reflect this year's record influx of asylum seekers and refugees. Berlin expects the arrival of 800,000 people by the end of 2015 and so far has approved nearly 40 percent of all asylum claims for this year.
The arrival of large numbers of refugees could push up unemployment next year, the German labor office research institute IAB said on Thursday.
United Germany's previous biggest annual intake of foreigners was in 1992 when it took large numbers of refugees fleeing conflicts in the former Yugoslavia.
As in much of Europe, Germany's population is aging fast, with deaths outstripping births. Researchers had previously estimated a population decline to 73.1 million people by 2060, despite high levels of migration.