“I am throwing my hat in the ring,” the 48-year-old, who heads the party's Berlin parliamentary party, announced in Der Spiegel magazine on Sunday.
He said he had already informed the federal board of the party of his intentions.
The two men are vying to succeed Reinhard Bütikofer, who has announced he will not stand for re-election in November.
Whoever wins will share leadership of the party with Claudia Roth, who will stand for - and is expected to win - re-election.
Ratzmann says he would try to sharpen up the party's profile and free it from its political ties with the Social Democrat Party. But this should not mean becoming so ideological that voters turn away.
He told the Morgenpost Online he stood for a "very pragmatic and Realpolitik course" which would create room for manoeuvre apart form the SPD.
He said he would not commit to a preference for coalition with the SPD or conservative Christian Democrat Union on a federal level – or even a different combination involving more than one other party.
Özdemir, 42, was an MP and considered a rising star within the party until 2002 when a scandal involving free airline frequent flyer miles and a cheap private loan from a PR businessman led to his resignation.
Two years later he was elected to the European parliament and is currently his party's European foreign policy spokesman.
Both men are considered ‘realo's within the party – realistic – rather than the fundamentalists who oppose making compromise for the sake of a share in power.
The Greens have been sliding in the polls particularly since Joschka Fischer, foreign minister and vice chancellor in the Red-Green governments and powerful leader of the party, stepped out of active politics in 2006.