The German Defense Ministry considered an incident in which a soldier was told to imagine facing hostile blacks in the Bronx while firing a machine gun "absolutely unacceptable."
"This behavior is absolutely unacceptable and contradicts the training standards of the German army," defense ministry spokesman Thomas Raabe said at a news conference.
He said the army was investigating the incident, recorded in an Internet video, and would probably complete the inquiry in two to four weeks.
The video - in which an army instructor tells the soldier to shoot and yell obscenities - aired on German national television Saturday and prompted calls for an apology by the New York City borough's president.
The video shows an instructor and a soldier in camouflage uniforms in a forest. The instructor tells the soldier, "You are in the Bronx. A black van is stopping in front of you. Three African-Americans are getting out and they are insulting your mother in the worst ways. ... Act."
The soldier fires his machine gun several times and yells an obscenity several times in English. The instructor then tells the soldier to curse even louder.
The German Defense Ministry said the video was shot in July 2006 at barracks in the northern town of Rendsburg, and that the army has been aware of it since January.
"We found out about it because a soldier gave his superior a CD on which one could see the images," Raabe said during a news conference Monday.
The video was greeted with indignation in New York, but has drawn only muted reaction in Germany despite following two other incidents that raised concern about training in the German army. A group of instructors is now on trial for allegedly abusing recruits, while newspaper photos of German soldiers posing with skulls in Afghanistan caused a stir.
The Germany army is made up largely of draftees, but increasingly is called on to carry out sensitive overseas peacekeeping missions.
A headline Monday in the taz newspaper focused on U.S. reaction to the video scandal: "Army Video Horrifies New Yorkers."
In an interview with AP Television News, Raabe said the incident was exceptional.
"In every society, in Germany, in France, in Britain and in the United States something like that happens but I think it is really an isolated case," Raabe said.
"We have a success story for more than fifty years in our German army and it is really seldom that something like that happens. I think it is not a special German problem," he added.
In New York, Bronx Borough President Adolfo Carrion Jr. has called for whoever was responsible to be disciplined.
"The German government obviously has work to do to correct something that is insidious. ... Clearly these folks don't know anything about African-Americans or the Bronx," he said Saturday.