Thomas Müller scored twice while Mario Goetze also netted before an own-goal from Gibraltar's Yogan Santos completed the win, but the anticipated German goal bonanza failed to materialize.
Gibraltar provided little resistance, but the below-par win did little to boost Germany's confidence after last month's shock 2-0 away defeat to Poland before conceding a last-minute equaliser in their 1-1 draw at home to the Irish.
Poland stay top of Group D by virtue of their 4-0 win in Georgia earlier while Ireland hold onto second on goal difference from the Germans, who also have seven points, despite their 1-0 defeat to Scotland.
Germany missed the chance to finish their World Cup-winning year second in the table and their unconvincing display left Löw admitting his team are playing below the standard required.
"I am anything but happy, the team didn't measure up the way we had wished," said Löw, whose side managed just one goal in the second-half.
"We want to play like world champions, so from that perspective four goals isn't enough.
"We didn't do the things we talked about before the game and the performance wasn't up to scratch."
Germany face European champions Spain in Vigo on Tuesday in a friendly and Löw said he expects his players to finish the year with a good performance.
"I think a few players need the winter break to get their heads back into things and put Brazil behind us," he admitted.
Gibraltar's five-man defence frustrated the hosts in Nuremberg.
"We would have liked a better result, but it's not easy when a team stands as deep as Gibraltar did," admitted goal-scorer Götze.
"We could have created more goals and played more convincingly, which we have to put our hands up to."
Germany goalkeeper Manuel Neuer had little to do over the 90 minutes apart from saving a superb cross-cum-shot from Gibraltar's Liam Walker, but the captain was relaxed about the display.
"We always want to give our best, but it's difficult when there is a bus parked at the back," said the Bayern Munich star.
"Then it's not so easy and the important thing is that we scored one or two goals in the first half."
Gibraltar, who only became a full UEFA member last year and are not yet recognised by FIFA, were never going to seriously test the world champions after losing 7-0 to both Poland and Ireland in previous qualifiers.
With Preston North End defender Scott Wiseman as the only full-time professional in the starting line-up, Gibraltar are still looking for their first goal of the campaign having now leaked 21 in their four qualifying games.
But coach Allen Bula was delighted with the result from his part-timers against the world champions.
"I'm very, very proud, how little Gibraltar, the smallest nation in UEFA, fought against the world champions," said Bula.
"We have shut up a few people who said we hadn't deserved the chance to play here.
"A 4-0 result against the world champions is as much as you can wish for and now we can return to our normal lives."