The early morning raid on Thursday covered 12 locations across four German states, and netted an unspecified number of suspects, according to Germany's federal prosecutor.
"The accused are suspected of attempting, in the service of a foreign intelligence agency, to obtain parts for delivery systems and conventional weaponry for armed forces," the prosecutor's office said in a statement.
Police would not say what foreign agency that might have been, but a source told the Reuters news agency that the country involved was Iran. Police were interrogating the suspects after raids in the states of Baden-Württemberg, Hesse, North Rhine-Westphalia and Saarland. Two men were arrested in Frankfurt, according to a police spokeswoman.
Second espionage case in a month
Prosecutors charged two German citizens last month with espionage for helping an unidentified intelligence agency acquire "dual-use" missile technology. The term is applied to technology that can be used for both conventional machines and weapons.
Germany, together with France and Great Britain, has been unsuccessfully negotiating for the end of Iran's nuclear program ambitions. German Foreign Minister Frank-Walter Steinmeier has not ruled out referring Iran to the UN Security Council for sanctions -- a move advocated by the United States.
Russia is currently trying to broker a deal by which Iran would avoid the Security Council, but no longer have control over its uranium-enriching process.