Some 150 radical Islamists are currently serving sentences or are in custody in German prisons, German newspaper Die Welt reported, referring to data by the Federal Criminal Police Office (BKA).
This number is likely to increase due to recent inquiries that have been launched into terror-related cases.
"In the next few years we must expect a wave of extremists in our prisons," minister of justice in the German federal state of Hessen, Eva Kühne-Hörmann, told the newspaper.
Many probes that are currently underway in Germany involve radical Islamist fighters who came back to Germany from the Middle East after waging jihad in the ranks of the Daesh terrorist group.
The official stressed that the high number of Islamists in detention facilities across Germany poses serious challenges in the field of "de-radicalization and prevention work."
According to Kühne-Hörmann, prison should help extremists reintegrate into society, otherwise "releasing radical Islamists and those without prospects back into German society" would be a dangerous move.
In December, German authorities said that the number of terror-related investigations in 2017 increased fivefold compared to the previous year, reaching about 1,200.
The cases involve radical preachers, foiled terrorists and former Daesh fighters returning from the Middle East.