Germany is to investigate allegations by US intelligence leaker Edward Snowden that the US government bugged Chancellor Angela Merkel's phone.
Federal prosecutor Harald Range informed the German parliament's legal affairs committee that an investigation would be held into persons unknown.
Merkel has publicly asked for an explanation for the alleged spying by the US National Security Agency (NSA).
The inquiry was announced as US President Barack Obama visited Europe.
At the same time, Range said he had decided opening an investigation into claims of wider NSA surveillance of German citizens, AFP news agency reports.
Pressure for a wide-ranging investigation had been growing, correspondents say.
Germany opens inquiry into claims that the NSA tapped Angela Merkel's phone http://t.co/gCPTIhzqAV
— GuardianUS (@GuardianUS) June 4, 2014
The German and US leaders are due to meet in Brussels at a G7 summit today.
Obama told the German chancellor last month that he was "pained" that Snowden's disclosures had strained the US-German relationship.
The US leader said he had directed US intelligence agencies to weigh the privacy interests of non-Americans as well as US citizens and residents, "in everything that they do".
Merkel has proposed establishing a European communications network to avoid emails and other data automatically passing through the US.