Investigations by federal anti-terror police discovered that a martial arts school in Mönchengladbach, North Rhine-Westphalia, employed teachers and members of staff with links to the local Salafist scene.
Some staff members were reportedly linked to the banned group "Invitation to Paradise".
Training sessions were aimed at kids in the local area.
In conjunction with the local council the police intervened "in order to work against the possible radicalization of children and young people," local authorities said in a statement.
City administrators discovered an array of offences at the school, stating that the sports centre had failed to comply with legal regulations. The owners have now shut down the martial arts school as a result.
A young man arrested on suspicion of involvement with the terror organisation Isis upon his return from Syria in January is also thought to have regularly attended the centre.
In light of the case Mönchengladbach police called for witnesses with any further leads linked to activities or members of the city's "Jihadi scene" to come forward.
They warned against renewed attempts by members of this scene "to get young people interested in their aims using supposedly attractive leisure activities".