Germany issued a ban on membership of the Iran-backed Lebanese Hezbollah and designated the entire group a terrorist organisation on Thursday,
Senior politicians in the Bundestag issued calls for a change in the country's diplomatic policies in the region.
Police conducted early morning raids in Germany to detain suspected members of the group in the cities of Bremen, Berlin, Dortmund and Munster.
Security officials believe up to 1,050 people in Germany are part of Hezbollah's extremist wing.
The move makes it illegal to raise funds for the group and to use the flag of the Lebanese militia at rallies in Germany, a factor that led the German Parliament to vote for a ban on Hezbollah late last year.
Horst Seehofer, the Interior Minister, announced the ban and said the raids showed the state could enforce its laws even in the middle of a pandemic.
The 30-page document containing the ban was openly published and "sent to the unknown address" of the group's leader, Hassan Nasrallah.
Police were said to have collected 16 objects from the Ershad Institute in Berlin, the Imam Madhi centre in Munster, the Centre of Lebanese Immigrants in Dortmund and Al Mustafa in Bremen.
German officials believe there are at least 30 centres in the country that are controlled or heavily influenced by Hezbollah.
"Hezbollah is a terrorist organisation that is believed to have carried out numerous attacks and kidnappings worldwide," Mr Seehofer said.
"Its criminal activities and planning of attacks is also taking place on German soil.
"It is part of our historical responsibility to take all possible measures against the rule of law.”
The ban comes more than a year after a prohibition order went into effect in the UK.
The US Secretary of State, Mike Pompeo, commended the German decision and called on all European countries to match the move to outlaw Hezbollah.
"Obstructing this terrorist organisation's ability to plot terrorist attacks and to raise money will further reduce Iran's malign behaviour and influence," Mr Pompeo said.
"The world increasingly recognises Hezbollah for what it is – not a defender of Lebanon as it claims to be, but a terrorist organisation dedicated to advancing Iran’s malicious agenda.
"With this action, Germany joins the growing ranks of nations that reject the false distinction between Hezbollah’s terrorist operations and a purported 'political' wing."
Like the EU, Germany had until now only outlawed Hezbollah's military wing while tolerating its political activities.
The US and Israel designate Hezbollah a terrorist group and urge allies to follow suit.
Leading members of the German Parliament called on the government to go further and use its diplomatic presence to expose Hezbollah activity.
When the Bundestag debated the motion, members expressed concern over "terrorist activity in Syria", where Hezbollah's units have fought alongside President Bashar Al Assad's troops.
“The octopus arms of the terrorist organisation Hezbollah, which is responsible for terrorist attacks worldwide and aims to destroy Israel, reaches as far as Germany,' said Christoph de Vries of the ruling Christian Democratic Union.
"I am very pleased that our decision in the Bundestag, for which we fought for a long time and where we had to do some persuasion, quickly had an effect."
Marian Wendt, another MP from the party, said it was important to see rigorous and sustained action against Hezbollah fund-raising in Germany.
“We must clearly follow the line of zero tolerance when dealing with terrorists and everyone who supports them," Mr Wendt said.
"Hezbollah and its structures have used our free country as a swimming pool for far too long.
"With a consistent crackdown by the Ministry of the Interior and the police, we can deal a severe blow to clan-based crime."
Liberal politician Bijan Djir-Sarai said the move must also mean changes in relations with states that support Hezbollah, and he called on Heiko Maas, the Foreign Minister, to take a new course.
"We need urgent changes in dealing with states that actively support Hezbollah, because it is an important power factor in Lebanon and Syria, which is also controlled by the regime in Tehran," Mr Djir-Sarai said.
Hezbollah is also a significant backer of the government of Lebanese Prime Minister Hassan Diab, which took office in January.
On a trip to Berlin last year, Mr Pompeo said he hoped Germany would follow Britain in banning Hezbollah.
The raid on the four mosque associations in the western state of North Rhine-Westphalia, Bremen and Berlin, is likely to lead to police visiting other places believed to be close to Hezbollah.
Regional branches of German's intelligence agencies have voiced concerns over the group's activities for years.
The Imam Mahdi Centre in Munster was described as a “platform and meeting place for Hezbollah supporters in North Rhine-Westphalia and western Germany for over 20 years”, in the state's constitutional protection annual report in 2018.
In the same year, Bremen's branch said the Al Mustafa community was "involved in financial support for Hezbollah".