The suspect, identified only as Innocent S under German privacy rules, is accused of ordering the deaths of 25 Tutsis on five separate occasions while serving as an assistant to the mayor of Kayove in northwestern Rwanda.
In one instance, the suspect is accused of personally taking part in the killing by stabbing a victim in the chest with a knife, the prosecutors said.
The suspect, who was arrested in the central German state of Hesse, also used his position to incite the extermination of Tutsis in his town and had death lists drawn up, they added.
Germany has prosecuted several suspects linked to the 1994 genocide in Rwanda under the principle of universal jurisdiction, which allows courts to try certain grave international crimes regardless of where they were committed.
More than 800,000 Tutsis and moderate Hutus were systematically massacred in the East African nation by Hutu extremists over a roughly 100-day period from April to July 1994.
(Reporting by Miranda Murray, editing by Thomas Seythal)

A Rwandan woman overcome with grief is lead away from commemorations marking the 15th anniversary of the 1994 genocide in Kigali, Rwanda on 07 April 2009. Over 800,000 Tutsi and moderate Hutu were slaughtered over 100 days of genocide that wracked the country in 1994. EPA/STR