Artist Ottmar Hörl, who has already displayed his provocative gnomes in Belgium and Italy, said it was the first public display in Germany.
“It is a work that is meant to get people to think, to react,” he said. “I want to show that we all have far-right thoughts in our heads.”
Hörl found himself in hot water with his gnomes in July after prosecutors in Nuremberg launched an inquiry into whether displaying one of the diminutive figures in a German art gallery was against the law.
Hitler salutes and Nazi symbols have been illegal in Germany since the end of World War II, but prosecutors accepted Hörl's argument that the 40-centimetre (15-inch) figurines were ridiculing the Nazis, not promoting them.
The artist said the garden gnomes – a popular symbol for Germany's uptight petit bourgeoisie – were a perfect subject “to deal with a serious topic in a not so serious fashion and without accusation.”
Hörl, who has designed other, less controversial, public art exhibitions and permanent installations, explained he hoped to draw attention to the rise of right-wing extremism in Europe.
Straubing's Mayor Hans Lohmeier said the gnomes would be guarded around the clock after some "critical voices" about the exhibition, which started Thursday and will run until Monday in the town's main square.
“There are those who wonder what the heck we're doing here. Others believe it's endangering their children,” Hohmeier said. “But many have also realised what it's all about.”
The gnomes are also for sale on Hörl's website – priced at €45 ($67) or signed by the artist for €120.