The DNA traces of NSU terrorist Uwe Böhnhardt were found at the site where Peggy's remains were found in July, police and state prosecutors said on Thursday evening.
It is not clear whether this is a coincidence, or whether Böhnhardt could have been involved in the girl's disappearance.
The nine-year-old went missing on May 7th 2001 on her way home from school in Lichtenberg in Upper Franconia, Bavaria, prompting one of Germany's largest child abduction searches with alerts about her disappearance broadcast as far as Turkey, her father's homeland.
The investigation involved thousands of police officers, as well as German military Tornado jets to search the woods surrounding her home.
Finally this year in July, police confirmed that skeletal remains discovered by a mushroom hunter in Thuringia, near the Bavarian border, were highly likely to be those of Peggy.
But the announcement that the DNA of notorious neo-Nazi Böhnhardt was found at the site brings forth new questions.
Böhnhardt was a member of the three-person NSU terrorist cell, which has been implicated in ten murders between 2000 and 2007 of victims who mostly came from immigrant backgrounds, as well as bombings and bank robberies.
Böhnhardt and fellow NSU member Uwe Mundlos were found dead in 2011 in an apparent double suicide after a botched bank robbery attempt. The third and only surviving member, Beate Zschäpe is currently on trial for the group's actions.
Investigators said that a large amount of DNA evidence was found at the site of Peggy's bones, which had been identified as “matching with Böhnhardt”.
“In what context this DNA was there, how it came to be there and whether it is associated with the death of Peggy, this requires a comprehensive investigation in all directions, which is currently still being conducted and is at the very beginning,” investigators said.
Investigators would not give further details about Böhnhardt's DNA, but Spiegel reported that sources said his DNA was found on a piece of textile, and broadcaster Bayerischer Rundfunk reported that it was found on a piece of fabric the size of a fingernail.
What the new find in connection to Peggy will mean for the ongoing case against Zschäpe is yet unclear.
“I would hope that Ms. Zschäpe would shed light on what happened and unpack what she knows about this case,” said attorney Mehmet Daimagüler, who represents plaintiffs in the case, to the Kölner Stadt-Anzeiger.
Daimagüler has also requested the presentation of new evidence in the case, including reviewing child porn found on a computer of the NSU, he told news agency DPA.
Inside the hide-out of the trio, which was found burned down after the two men killed themselves, police had found evidence of child pornography materials.
The lawyer said that it must be investigated as to who had downloaded the materials - “Böhnhardt, Uwe Mundlos, Beate Zschäpe or all three”.
What happened to Peggy has remained one of Germany's biggest mysteries. The case led to the controversial prosecution of Ulvi K., who lived in the same town as Peggy. Despite having a reported IQ of 68, police claimed he confessed to the crime, including murdering Peggy to get rid of the evidence of sexual assault.
In 2004 he was sentenced to life in prison, but ten years later the verdict was overturned on appeal. Since then no further arrests have been made.