Rookie sensation Fabio Quatararo continued his superb form in Free Practice 1 to pinch top spot ahead of Marc Marquez and Valentino Rossi.
It was another very strong session for the Petronas Yamaha rider, who was sitting third for the majority of the session before a lap time of 1:21.390, moved him ahead of race favorite Marquez by +0.074s.
Marquez is a nine-time winner at Sachsenring, and the Spaniard led the way from the outset, which included lapping just shy of the race lap record on only his seventh lap.
Unlike the two Yamaha riders who fitted a new medium rear in the latter stages, Marquez deployed his usual tactic on a Friday of producing a race simulation on the same rear tyre with Sunday in mind.
It was a positive start to the German Grand Prix for Rossi, who enjoyed one of his better starts to a Friday with third place on the Monster Yamaha.
The Italian finished the session half a second down on the top two, as he looks to bounce back from three consecutive non finishes.
Alex Rins was pushed down to fourth in the closing stages, as the Suzuki Ecstar rider did not fit a new rear tyre like Marquez.
With Assen being a missed opportunity for Rins, it was important for the Circuit of the Americas (COTA) winner to immediately be on the pace which was the case.
Maverick Vinales comes into the weekend off the back of a great victory in Assen, and the Monster Yamaha rider finished fifth in what should be another favorable track for the 24 year-old.
Second in the championship is Andrea Dovizioso, who has had a rough run of results recently. On paper the German layout is not a great one for the Ducati team, but a solid start to the weekend is something Dovizioso can now build upon.
Seventh was Jack Miller of the Pramac Ducati team, ahead of the resurgent Andrea Iannone. The Aprilia rider achieved his best result of the season in Assen with tenth place, and seems to have carried that confidence into this weekend.
LCR Honda riders Takaaki Nakagami and Cal Crutchlow rounded out the top ten. Crutchlow has not hit the early season heights in recent races, so the British rider will be looking to achieve a decent points finish before the summer break.