“Whatever happened is in no way acceptable,” said Defence Minister Annegret Kramp-Karrenbauer.
Those implicated would be “vigorously prosecuted and punished”, she added.
The Spiegel Online news site had on Monday reported that German soldiers in Lithuania sang racist and anti-Semitic songs during a party at a hotel in April.
One had also sought to sexually assault another soldier while he was asleep, a scene which was caught on film, said Spiegel.
According to Spiegel Online, the scenes took place at a party at which soldiers consumed large quantities of alcohol. They are also alleged to have arranged a “birthday table” for Adolf Hitler on April 20th and to have sung songs for him.
It is unclear to what extent more senior ranked soldiers were aware of the incidents.
Three soldiers have been removed from the contingent stationed in the Baltic country and an investigation is ongoing to identify other suspects, said the report.
The German armed forces have been repeatedly rocked by allegations of right-wing extremism within their ranks.
Kramp-Karrenbauer last year ordered the partial dissolution of the KSK commando force after revelations that some of its members harboured neo-Nazi sympathies.