The most common reason for losing German citizenship is by applying for and receiving a foreign citizenship. Acquiring another citizenship automatically at birth on the other hand does not impact German citizenship.
German citizens can also renounce their citizenship voluntarily if they they also have another citizenship.
The most important reasons for loss of citizenship are:
If you willingly apply for and receive a foreign citizenship, you automatically lose your German citizenship according to paragraph 25 of the German citizenship act.
Loss of citizenship can be avoided by obtaining a special permit (“Beibehaltungsgenehmigung”) before you are naturalized in a foreign country:
Since 28.08.2007 (date of naturalization in the foreign country), German citizenship is no longer lost if you apply for and receive the citizenship of an EU member state or of Switzerland.
Since January 1st, 1977, minors who are adopted by a non-German and are no longer considered to be legally related to their German parent(s), lose German citizenship if the adoption automatically makes them a citizen of their adopted parents' country.
Since January 1st, 2000, German citizens who voluntarily join the armed forces of a country other than Germany, of which they are also a citizen, without receiving prior permission from the Federal Ministry for Defense (Bundesministerium der Verteidigung), automatically lose their German citizenship according to paragraph 28 of the German citizenship act.
Since July 6th, 2011 permission is considered to be automatically given among others to citizens of another NATO-member state if the join the armed Forces of this Country. As a result German-Canadian dual citizens who joined the Canadian armed Forces on or after July 6th, 2011, have not lost their German citizenship.
German citizens who had their permanent residence abroad for more than 10 years before the year 1914 automatically lost their German citizenship unless they registered themselves in the “Konsulatsmatrikel” (consular register) of the German consulate.
This reason for loss of German citizenship is particularly important in case you wish to trace back German citizenship to ancestors who emigrated Germany before 1904. If this is the case, they would have lost German citizenship after 10 years and could not have passed it on by descent to future Generations.
A German citizen who also holds the citizenship of another Country can renounce their citizenship by delaration.
Between January 30, 1933, and May 8, 1945, there were essentially two laws that deprived Germans of their citizenship. Under the “Law on the Revocation of Naturalizations and the Deprivation of the German Citizenship” of July 14, 1933, some Germans lost their citizenship after their names were listed and published in the Reich Law Gazette (“Reichsgesetzblatt”).
The vast majority of former German citizens affected, however, lost their citizenship when the “Eleventh Decree to the Law on the Citizenship of the Reich” came into effect on November 25, 1941. This law stated that Jews living outside Germany could not be German citizens, and mainly affected Jews who had left Germany in the years before or shortly after the beginning of the Second World War.
If you lost your German citizenship because of either one of these two regulations, you are entitled to apply for renaturalization according to German law. This also applies in most cases to your descendents.
Further Information regarding restoration of German citizenship can be found here.