European aerospace giant Airbus, which signed the €500 million agreement on behalf of the German defence ministry, will maintain and provide operational support for the Heron TP drones, Israel Aerospace Industries (IAI) said.
The Social Democrats had held up the deal for years in the Bundestag (German parliament) due to the sensitivity among their voters of using unmanned aircraft which are capable of firing missiles.
But, according to ARD, a compromise has been reached as, initially at least, the drones will not be armed. The government has also agreed that no German soldiers will be trained in the use of the drones’ weapons systems.
An official from the state-owned Israeli firm, speaking on condition of anonymity, said the deal covered five drones.
The German military currently uses Israel's Heron 1 in Afghanistan and Mali, with the more advanced Heron TP drones expected to replace earlier models.
Israeli Prime Minister Benjamin Netanyahu said on Thursday that the German parliament had approved the deal the previous day following the government's green light.
"It's a very large deal," Netanyahu said, "and that of course helps our defence industries and I think it helps security in Europe."
"It's a very, very good piece of news," he said at a security conference in Jerusalem.
IAI said the deal was pending German federal budgetary approval.
In 2016, German defence minister Ursula von der Leyen said the intention was to use the Israeli drones until a similar European model was operational.
Germany had considered buying Predator drones from the United States, but ultimately opted for the Heron TP, which German officials have said could be made available more quickly and would provide a smoother transition between models.