According to the Antenne Bayern radio station, the fire in Erkheim, a small town near Memmingen, had spread to the house from a shed where the girls' father kept supplies for his model aircraft-building hobby.
Seeing the six- and eight-year-old girls at the window, trapped by the fire which had already spread to the upper stories of the house, two neighbours dragged a children's trampoline into place so they could jump down onto it, the station reported.
The girls jumped out and landed safely on the trampoline, bouncing their way to safety.
"We were so relieved," Bernd Fischer, deputy commander of the Schlegelberger Fire Department, one of six fire departments from neighbouring towns to respond to the fire, told Antenne Bayern.
The father's girl was slightly injured and was treated for smoke inhalation in an ambulance before being released.
Preliminary estimates suggest the fire caused more than €150,000 worth of damage.