The punch-up, which took place in the northern town of Itzehoe, was the latest illustration of the rising tensions between refugees at the country's overstretched reception centres.
The dispute broke out during the evening meal on Friday when an Arabic-speaking refugee insulted a group of Kurds, a police statement said.
The confrontation quickly escalated, drawing in around 50 people who threw tables, chairs and benches and beat each other with table legs.
Security guards tried to break up by fight by using pepper spray and around 50 police and six dogs were called in as backup. Four asylum seekers were treated for head injuries and two security guards sustained light injuries, the statement said.
Two young Kurds -- one Syrian and one Iraqi -- as well as a Syrian were arrested after being singled out as the main instigators, with police saying they would be transferred to "other centres around the country".
Such incidents have multiplied at refugee centres across Germany, which is expecting to receive up to a million asylum requests by the end of the year and is struggling to accommodate everyone.
Meanwhile, Greek coastguard officials pulled 37 migrants to safety from a foundering boat in choppy seas off the Aegean island of Lesbos, port officials said.
The rescue came a day after 17 children drowned when three boats went down in the same area, along with nine adults as the flow of people seeking to reach Europe by sea showed no sign of easing, despite the onset of winter.