A worker accidentally punctured a 200-litre tank of the toxic chemical thiophenol with a forklift around 1 am, and some 30 litres of the sulphur compound escaped, Homberg police said.
All fire fighters in the Schwalm-Eder county, along with those in neighbouring communities, rushed to the scene. About 150 medics and 50 chemical specialists were also on hand to aid in decontaminating the area.
Police closed the industrial area off, clearing employees out of nearby businesses and urging residents to keep windows and doors closed. Vehicles were not allowed to leave the area.
Residents in the community of 14,000 were informed of the accident via emergency loud speakers.
Some 15 people were hospitalized with respiratory complaints.
Meanwhile 150 others were bussed to town hall and a gymnasium for medical exams. they were instructed to look out for symptoms of exposure that could arise up to 48 hours after the leak, police said. They also had had to give up their clothing for decontamination purposes. After showering at the sports hall they were given track suits to wear home.
Rescue teams had initially expected more than 100 injured and set up a large area with beds for treatment.
Meanwhile specialists managed to repair the tank's leak.
The chemical did not enter the local drainage system and should no longer pose a danger to residents, police said.
Thiophenol is a toxic, flammable irritant that can be absorbed through the skin or inhalation.