"Through the Darkest of Times" was presented this week at Gamescom, Europe's biggest trade fair for interactive games and entertainment.
Players slip into the boots of members of the "Red Orchestra", a network of groups who resisted the Nazis before and during World War II with support from the Soviet Union.
In previous games the black swastika on a white-and-red background was replaced with other symbols like triangles, to comply with a German law that generally bans such "anti-constitutional" symbols.
The German edition of last year's alternative-history blockbuster "Wolfenstein 2" had renamed Hitler and sheared off his signature moustache.
But now regulations have eased and the virtual Nazis wear their authentic symbol on their armbands, and their leader's facial hair and name have been reinstated.
"Developers used to be afraid to say what they were talking about, they just made up fantasies," said Jörg Friedrich, one of the developers of the new game.
"Hitler wasn't named Hitler but Heiler and had no moustache, there were no more Jews...That's problematic, because an entire facet of history has simply been hushed up."
'Artistic freedom'
Since early August, the taboo has been broken in Germany.
Pressure from publishers and video game players finally convinced Germany's entertainment software self-regulation body USK to grant the art form the same freedoms afforded to cinema or theatre.
"For the first time, games that take a critical look at the events of the past can be granted approval" in the name of "artistic freedom," USK director Elisabeth Secker said.
A 1998 court ruling had blocked video games from using Nazi symbols, with judges fearing at the time that children "will grow up with these symbols and insignia and grow accustomed to them".
Gamers have long chafed at the restrictions, which have often meant a different experience for German players than for those abroad.
"It's a past that we don't necessarily have to hide, it can also be a warning," said Gamescom visitor Michael Schiessl.
Others argue that the swastika should remain taboo, fearing real-world consequences.
"We shouldn't play with swastikas," Family Affairs Minister Franziska Giffey told the Funke newspaper group on Thursday.
Germans above all must "always be conscious of their particular historical responsibility, even today", she added.
Stefan Mannes, who runs an online information portal on the Third Reich named "The Future Needs Remembrance", was blunter.
He asked how one could explain to youths who are exposed to swastikas in video games "that they'll be prosecuted if they spray one on a wall?"
"One doesn't become a Nazi just by seeing a swastika," countered Klaus-Peter Sick, a historian at Berlin's Marc Bloch Centre, a Franco-German social sciences research centre.
"Players are intelligent and know how to tell the difference" between fiction and reality, he added.
'No long wants to return'
What's more, the USK has only slightly loosened its rules.
There will be no general permission for Nazi signs, but case-by-case decisions on whether their use is "socially appropriate".
Other art forms have already blazed a trail in recent years, with many movies for the first time daring to satirise the dictator.
Films like "My Führer: The Really Truest Truth about Adolf Hitler" (2007), "Heil: A Neo-Nazi farce" (2015) and "Look Who's Back" (2015), based on the best-selling novel of the same name, have packed cinemas.
And a new edition of Hitler's "Mein Kampf" - accompanied with reams of historical annotations - was published in 2016.
On the other hand, concern is growing over a resurgent and newly emboldened right-wing extremist and anti-immigration movement.
Leading figures of the far-right Alternative for Germany (AfD) party have attacked Germany's culture of remembrance of Nazi crimes and even sought to rehabilitate its soldiers of the two world wars.
Historian Sick nonetheless sees the video gaming move as another sign of "normalization" in Germany's relationship with its dark past.
"This society is able to read 'Mein Kampf' without becoming nostalgic. The dedicated Nazis are dead," he argued.
"It's a generational question: society has transformed itself and is now far from this period to which it no longer wants to return."
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