Stocks were up 1.3 percent from Friday and in midday trading passed the previous high of 8557 setting a record for the DAX's 25-year history.
Analysts said the surge was prompted by former US Treasury secretary Larry Summers withdrawing his name to be the next chair of the US Federal Reserve.
It fuelled hopes of a continuation of a loose monetary policy in America, Daniel Saurenz from Feingold Research said.
Germany's MDAX of small and medium sized businesses also soared along with stocks in Europe and Asia. The MDAX was up 1.23 percent at 15,023 points, short of its highest ever mark of 15,034.88.