Ministers "are not ruling out deploying troops" to Syria, the weekly news magazine reported.
That would be a big step up from Germany's current role in the battle against Isis of arming and training Kurdish Peshmerga troops in northern Iraq.
Officials close to Chancellor Angela Merkel believe it's increasingly likely that German troops might be called on to supervise a negotiated ceasefire.
They expect that Russian President Vladimir Putin will be keen to withdraw his own forces from Syria, based on his moves to co-operate more closely on the crisis with the USA in recent weeks.
With Russia onside, the other powers on the UN Security Council will have a clearer way to passing a resolution for joint action in Syria.
Previous attempts to organize UN intervention have foundered on Russian resistance, as Putin has continued to back Syrian dictator Bashar al-Assad.
Russian airstrikes in recent weeks are believed to have largely been directed at moderate opposition forces fighting Assad, rather than at Isis.
But Foreign Minister Frank-Walter Steinmeier said on Monday that he believed there was hope for peace negotiations going on in Vienna, which involve the EU, Russia, and the US as well as regional powers such as Turkey, Saudi Arabia and Iran.
There would be no purely military solution to the threat of Isis, Steinmeier warned at the time.
More soldiers to sent to Afghanistan
The cabinet decided on Wednesday to moderately restrengthen the Bundeswehr's (German army) presence in the north-east of Afghanistan.
The upper limit of soldiers involved in the mission will be raised from 850 to 980, but the central principal of the mission – to train and advise local forces – will remain unchanged.
There are no plans to return to conducting combat missions.
But the government wants to change the text of the mission statement to allow the Bundeswehr more room to advise their Afghan counterparts.
The cabinet also agreed upon extending Germany's involvement in “Active Endeavour” the EU's anti-people smuggling mission in the Mediterranean.