In an almost hour-long speech in Prague, Mr Scholz urged the EU to rededicate its historic peace project to preventing war in its neighbourhood as well between its members.
He urged a long line of reforms to boost the EU's political and economic clout so that an expanded bloc can “help shape the 21st century in our European way”.
A potential 36-member union with members including Ukraine, Moldova and several Balkan states should act by majority decision so that one country's veto no longer stands in the way, he said.
“Ukraine is not Luxembourg. Portugal looks differently at the world's challenges to North Macedonia,” he said. “We have to make the EU fit for this big expansion.”
Many of Mr Scholz's talking points were in line with French President Emmanuel Macron's desire for a more “sovereign Europe”, and other officials' calls for more EU military muscle.
But the speech by a German chancellor sometimes accused of lacking vision or dynamism marks his biggest intervention since he turned a page on postwar pacifism in the days after war broke out.
“Bravo … finally a clear international commitment from the German government,” said Wolfgang Ischinger, a former chairman of the Munich Security Conference who has sometimes criticised Mr Scholz.
Mr Scholz's proposals include:
— Expanding the EU from 27 to 36 to include Ukraine, Moldova, Georgia, Montenegro, Albania, North Macedonia, Serbia, Kosovo and Bosnia and Herzegovina, which are at various stages of applying;
— Co-ordinating the purchase of military equipment by European armed forces to reduce costs and training time, and co-operating on air defence;
— Seeking new partnerships in Asia, Africa and Latin America as part of a “political and economic diversification” as Washington's focus turns to China;
— Finding common ground on migration policy by strengthening external border protection and admitting Croatia, Romania and Bulgaria to the Schengen zone;
— Rewriting debt and finance rules to overcome another subject of frequent disagreement in the EU, and making Europe's economy a leader in green technology;
— Reforming other EU institutions, so that members of a possible 36-member Commission share portfolios to prevent it becoming too bloated.
Mr Scholz said the European project, born in the ashes of the Second World War, had succeeded in making war unthinkable between its members.
“Today, it is up to us to renew this promise of peace, by enabling the European Union to ensure its security, its independence and its stability against threats from outside as well,” he said.
Ukraine was granted EU candidate status in June and the war there has revived interest in the long-stalled process for Balkan countries, amid concern they would otherwise fall into Russia's camp.
Mr Scholz said European unity was a “thorn in the side” of Russian President Vladimir Putin because it contradicted the Kremlin's belief that smaller countries could be pushed around.
He said he supported Mr Macron's idea of a looser European political community in which leaders of EU members, applicants and maybe third countries such as Britain would hold regular talks.
The first summit of that community is due to take place in October in the Czech Republic, which currently holds the EU's rotating presidency.
But Mr Scholz reassured applicants such as Ukraine that he did not see this as a substitute for an enlarged EU that would have to be reformed to cope with its larger size.
A move away from unanimity in key foreign policy decisions would be sure to raise doubts among smaller countries that fear any treaty change could dilute their power.
Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, Latvia, Lithuania, Malta, Poland, Romania, Slovenia and Sweden signed a joint paper in May pouring cold water on the proposal.
Ukraine crisis — in pictures
Mr Scholz addressed another concern of some EU members, especially in the east, by saying greater military clout would not lead to Nato being sidelined as Europe's main security protector.
But while praising US President Joe Biden, he said a future White House administration could focus more on China and that more European capability would only strengthen Nato.
His remark that Russia was positioning itself “for the foreseeable future” in opposition to the EU marked the latest break with his party's long-standing desire for conciliation with Moscow.
It comes as some voices on the German left call for a revival of peace talks with Russia as the six-month war takes its toll on European economies.
Mr Scholz said Mr Putin and other autocrats such as Belarus's Alexander Lukashenko would exploit any differences in the EU, meaning it needed to close ranks on the thorny issues of migration and finance.
“When, if not now, when Russia is trying to move the border between freedom and autocracy, can we lay the foundations for a bigger union of freedom, security and democracy?,” asked Mr Scholz.
“When, if not now will we create a sovereign Europe that can assert itself in a multipolar world?
“Europe is our future, and that future is in our hands.”