The Ifo institute's closely watched business climate index inched slightly higher to 106.8 this month from 106.7 points in January, the think tank said in a statement.
It was the fourth consecutive monthly rise, taking it to the highest level since July 2014, it said.
Companies' "satisfaction with the current business situation decreased somewhat, but companies expressed greater confidence in future business developments," said Ifo president Hans-Werner Sinn.
Ifo calculates its headline index on the basis of companies' assessments of current business and the outlook for the next six months.
The sub-index measuring current business slipped to 111.3 points from 111.7 points, while the outlook sub-index increased by 0.5 point to 102.5 points, the institute said.