The Honda rider traded first places on the standings with Championship leader Valentino Rossi from the tenth minute of the session, before eventually securing top spot with a time of 1m 21.838s at the halfway stage of the tournament.
Towards the end of the session, the 22-year-old Spaniard fitted the new asymmetric Bridgestone front tyre and managed to shave off another 0.072s off of his previous best time on his penultimate lap of the session.
His fastest time proved to be 0.336s over Rossi, while Marc VDS Honda rider Scott Redding finished in third place, four tenths down on Marquez's best.
Marquez's Honda team-mate continued to impress after returning to the sport having undergone arm pump surgery earlier in the season and finished in fourth place, ahead of Pramac's Yonny Hernandez and Andrea Dovizioso on the Ducati.
Rossi's Yamaha team-mate Jorge Lorenzo – who has never won at the German track, could only manage a seventh place on Friday morning, some 0.679s behind the pace-setter.
Next was Aleix Espargaro debuting the new retro Suzuki livery, while LCR Honda's Cal Crutchlow and Ducati's Andrea Iannone completed a top ten.
1. Marc Marquez ESP Repsol Honda Team (RC213V) 1m 21.766s [Lap 20/21] 293km/h (Top Speed)
2. Valentino Rossi ITA Movistar Yamaha MotoGP (YZR-M1) 1m 22.102s 0.336s [10/26] 291km/h
3. Scott Redding GBR Estrella Galicia 0,0 Marc VDS (RC213V) 1m 22.167s 0.401s [23/23] 287km/h
4. Dani Pedrosa ESP Repsol Honda Team (RC213V) 1m 22.243s 0.477s [23/23] 290km/h
5. Yonny Hernandez COL Octo Pramac Racing (Desmosedici GP14.2) 1m 22.396s 0.630s [20/23] 291km/h
6. Andrea Dovizioso ITA Ducati Team (Desmosedici GP15) 1m 22.428s 0.662s [20/20] 296km/h
7. Jorge Lorenzo ESP Movistar Yamaha MotoGP (YZR-M1) 1m 22.445s 0.679s [19/21] 290km/h
8. Aleix Espargaro ESP Team Suzuki Ecstar (GSX-RR) 1m 22.462s 0.696s [17/19] 286km/h
9. Cal Crutchlow GBR CWM LCR Honda (RC213V) 1m 22.567s 0.801s [15/20] 287km/h
10. Andrea Iannone ITA Ducati Team (Desmosedici GP15) 1m 22.670s 0.904s [22/24] 295km/h
11. Maverick Viñales ESP Team Suzuki Ecstar (GSX-RR)* 1m 22.674s 0.908s [18/19] 285km/h
12. Pol Espargaro ESP Monster Yamaha Tech 3 (YZR-M1) 1m 22.696s 0.930s [17/20] 293km/h
13. Bradley Smith GBR Monster Yamaha Tech 3 (YZR-M1) 1m 22.698s 0.932s [10/25] 293km/h
14. Danilo Petrucci ITA Octo Pramac Racing (Desmosedici GP14.1) 1m 22.792s 1.026s [10/22] 291km/h
15. Nicky Hayden USA Aspar MotoGP Team (RC213V-RS) 1m 22.935s 1.169s [18/21] 285km/h
16. Hector Barbera ESP Avintia Racing (Desmosedici GP14 Open) 1m 23.163s 1.397s [12/18] 286km/h
17. Mike Di Meglio FRA Avintia Racing (Desmosedici GP14 Open) 1m 23.299s 1.533s [18/21] 289km/h
18. Alvaro Bautista ESP Factory Aprilia Gresini (RS-GP) 1m 23.878s 2.112s [10/16] 283km/h
19. Eugene Laverty IRL Aspar MotoGP Team (RC213V-RS)* 1m 24.007s 2.241s [22/24] 282km/h
20. Hiroshi Aoyama JPN Cardion AB Motoracing (RC213V-RS) 1m 24.063s 2.297s [19/20] 286km/h
21. Alex De Angelis RSM E-Motion IodaRacing (ART) 1m 24.063s 2.297s [10/23] 280km/h
22. Jack Miller AUS CWM LCR Honda (RC213V-RS)* 1m 24.096s 2.330s [21/21] 286km/h
23. Michael Laverty GBR Factory Aprilia Gresini (RS-GP) 1m 24.446s 2.680s [19/20] 282km/h
24. Loris Baz FRA Athina Forward Racing (Forward Yamaha)* 1m 25.462s 3.696s [24/26] 283km/h
25. Claudio Corti ITA Athina Forward Racing (Forward Yamaha) 1m 26.771s 5.005s [20/22] 282km/h