Revellers at the on3 festival in Munich booed and shouted at Doherty as he began singing "Deutschland, Deutschland über alles" during his set, but he carried until organisers removed him from the stage, Bavaria's TZ newspaper reported on Monday.
Doherty's tirade was broadcast live on Bavarian public radio, the festival's organisers.
"We decided to stop Peter Doherty's appearance on stage as quickly as possible," organisers Bayerischer Rundfunk said in a statement.
It is the latest in a long line of controversies for the 30-year-old Babyshambles singer, whose career has been marred by drug use and jail time.
The lines come from the first verse of the Deutschlandlied and this verse
was used as the national anthem under the Nazis. While the verse is not banned in Germany, it has not been sung since World War II because of its close links to the Third Reich.
Instead, Germans now only use the third verse that begins with "Unity, justice and freedom."