The high court has approved a bill that adds a third gender option. It will allow intersex people to register their identities under the term "divers".
This approval follows the complaint of an intersex person who cannot change the sex on their birth certificate. The person was considered a woman because their chromosomes show that they are neither a man nor a woman.
Last year, the German Supreme Court delivered its verdict and said the current system violates individual rights and anti-discrimination laws.
The court decided it was time to do something to allow everyone in the same situation to have a third option for their gender identity.
To come into force, the bill now requires the approval of Parliament. The Federal Constitutional Court has given this one until the end of 2018 to amend the current legislation.
Social Democratic minister for families Franziska Giffey and Justice Minister Katarina Barley welcomed the bill.
Barley also indicated that other bills would be introduced to end discriminatory laws against intersex people.
Germany is on track to recognize a third gender.