Paraguay raced into a two-goal lead with Jose Nunez and Wilson Pittoni scoring within 15 minutes, but Germany responded well with Ilkay Gundogan and Thomas Muller bringing them level within the next quarter of an hour.
Miguel Samudio then punished some slack defending once again to give Paraguay a half-time lead before Lars Bender spared Germany's blushes with an equaliser 15 minutes from time.
The hosts seemed to be in complete control of the early proceedings, but their defence was far from orderly as Paraguay scored with their first effort on goal in the ninth minute.
Mats Hummels allowed the ball to sail over his head and into the path of Nunez, who gave goalkeeper Manuel Neuer no chance with a powerful shot into the top corner.
A mistake by Sami Khedira was then pounced upon by Pittoni, whose volley was equally out of the reach of Neuer as Paraguay's second shot of the game rippled the net.
Undeterred, Germany responded with Gundogan pulling a goal back within five minutes with a low shot from just outside the penalty area.
The hosts then levelled with Muller providing a cool finish to beat Justo Villar on the half-hour mark as Germany flexed their muscles going forwards.
They remained susceptible at the back, though, and on the stroke of half time, Samudio was left far too much room at the far post to turn Roque Santa Cruz's low cross in and restore Paraguay's advantage.
Both coaches started the routine substitutions in the second half and it was one of Germany's replacements who brought them level again in the 75th minute.
The ball sat up nicely for Bender just inside the penalty area and he sent a powerful low volley into the far corner of the goal to salvage a draw for Joachim Low's men, although more questions will now be asked of his side's defence.