In coordinated raids, law enforcement hit addresses in Berlin, Thuringia, Baden-Württemberg and North Rhine-Westphalia believed to be connected to the internet platform Altermedia, several German media outlets are reporting.
Prosecutors in Karlsruhe are investigating the people behind the website on suspicion of forming a criminal network.
The group’s sole purpose in forming was to incite racial hatred, an offence under German federal law, prosecutors say.
Two leaders of the group were arrested in the raids and the properties of other members were searched by officers from the Federal Office of Investigations (BKA).
According to prosecutors the two arrested individuals, a 47-year.-old woman and a 27-year-old man, ran the website along with three other people.
The website calls for violence against immigrants and denies the Holocaust, prosecutors argue.
"Federal prosecutors took over the case because of its severity," a statement on the federal prosecutors website reads.
"The content of the website is being spread across the world. It encourages like-minded extremists to commit crimes and creates a climate of fear among the affected groups."
Prosecutors have also asked Russian authorities to shut down the website’s server, which is based on their territory. According to the Altermedia website, however, the server is based in Texas, USA.
The platform has for years been considered an important propaganda portal for the neo-Nazi scene, public broadcaster ARD reports.
In a report by the Verfassungsschutz (German domestic intelligence) from 2014 the site was described as “in part heavily imbued with militaristic and illegal comments.”