The 60 Chinooks will replace an ageing stock of Sikorsky CH-53G helicopters that were first used by the West German military in the 1970s.
They were chosen ahead of a more modern Sikorsky model because the Chinook is widely used in Europe and will allow for more military co-operation between Germany and its neighbours, Defence Minister Christine Lambrecht said.
The order is part of what Chancellor Olaf Scholz has described as a watershed moment for Germany’s armed forces after years of underinvestment.
Ministers blame the military’s threadbare supplies for limiting how far they can go in arming Ukraine without leaving Germany exposed. Kyiv has expressed frustration over the slow pace of weapons deliveries from Berlin.
“Russia’s brutal war of aggression has made us painfully aware of a long-overlooked fact: anyone who wants to live in freedom needs military strength to defend that freedom,” Ms Lambrecht said.
“We want to restore the army to what it should be: a capable army that can fully perform its core task of protecting our country and our alliance.”
Ms Lambrecht did not say how much the 60 new helicopters would cost but German media reported a figure of €5bn from the €100bn pot. The order will need approval by MPs.
American manufacturer Boeing, which makes the Chinooks, said it was working with companies including Airbus, Lufthansa and Rolls-Royce to supply the new fleet.
“With the Chinook, Germany will operate the most affordable, proven and Nato interoperable heavy-lift helicopter,” Boeing said.
"We are committed to delivering maximum operational availability to the German Bundeswehr for decades to come.”
Nato members Britain, the US, Italy, the Netherlands, Greece, Spain, Turkey and Canada already use the Chinook.
The two-pilot helicopter can carry more than 50 troops or 10 tonnes of cargo and is typically used for resupply or rescuing casualties from a battlefield.
Germany has also announced it will buy American F-35 fighter jets to replace its Cold-War era Tornados, a decision that Ms Lambrecht said had been delayed for too long under previous governments.
The one-off spending pot is in addition to Germany’s regular military budget, which is rising this year to more than €50bn but is below the Nato target of 2 per cent of gross domestic product.
The government and opposition this week agreed a deal to vote the extra funds through parliament, where a two-thirds majority is needed to exempt the special budget from debt limits.
Mr Scholz has said Germany will try to hit the Nato spending target from 2024. Several other European countries, including Poland, Lithuania, Denmark and Norway, have announced plans to increase their military budgets.