The pair of officers were called to the squirrel's aid on Monday when a woman found its little head, squealing manically, poking out of the road, the Hannoversche Allgemeine newspaper reported.
Initially they tried to push the animal's head down through the hole but it was too tightly jammed in, and upset the animal even more.
Sensing that their plan was not working, the officers in Isernhagen, Lower Saxony, decided to lift the entire lid up. With the heavy metal and concrete disc now vertical, one pushed gently on the squirrel's head while the other tried to tease its bottom half out.
This made little difference and the police officers decided to think outside the box by rubbing olive oil around the squirrel's neck.
But no amount of lubrication helped, and the officers found themselves with an oily and extremely upset squirrel on their hands.
Until, that is, one of them had the brainwave of pushing the animal's ears down before starting to tug it out again - this worked and it slid out, the paper said.
The squirrel was taken to shake the trauma off in a nearby garden, where officers left it looking relatively healthy. Bad news came some hours later though, when a neighbour reported that it had died.
The stress, the police told the paper, was probably too much for the animal to handle. But he is now thought to be in a big happy nut tree in the sky where there are no manhole covers.