The agent, named only as Andreas T., was in the internet cafe when the last victim of the National Socialist Underground (NSU) was shot – yet investigators have been unable to work out if he was involved.
Weekly paper Die Zeit says police suspected at the time he was involved in the murder of Halit Yozgat, a Kassel internet café worker, on April 6, 2006, but that the investigation was obstructed by the Hesse Office for the Protection of the Constitution - the state's intelligence agency.
Andreas T. was in the café at the time of the murder and police later found three guns, shotgun shells, and a copy of Adolf Hitler's Mein Kampf in his various homes.
Die Zeit reports that one Hesse investigator believed at the time that "a Hessian intelligence agent could have shot the young Yozgat." Andreas T. was subsequently "intensively interrogated" and was "constantly caught contradicting himself."
It was previously known that Andreas T. was in the internet café at the time of the murder. He claimed that Yozgat was shot behind his counter while he was in the back room, and that had he left the café without noticing anything untoward.
Investigators were reportedly puzzled by how Andreas T., who is over 6 feet 2 inches tall, could have overlooked the body and the blood on the counter.
Die Zeit also said that on the day of the killing Andreas T. held several phone calls with a far-right informant who had contact with the NSU's network of sympathizers and helpers.
Andreas T.'s employer, the Hesse state intelligence agency, also reportedly obstructed the police investigation by failing to provide any information. He now works at the headquarters of the state government in Kassel, the paper said.
The latest revelations come after German Interior Minister Hans-Peter Friedrich promised a wholesale reform of Germany's security services following the botched investigations into the NSU murders.
These led on Monday to the resignation of Heinz Fromm, president of the Federal Office for the Protection of the Constitution (BfV), after 12 years in charge.
The Die Zeit article was written by Stefan Aust, former editor-in-chief of Der Spiegel, best known for "The Baader Meinhof Complex," his history of the left-wing terrorist organization the RAF.