The 2010 World Cup winners had to chase the game twice in the second half before losing on a late stoppage-time winner from Croatia.
There are now just two rounds of games left in the Nations League, and the picture is becoming clearer for the finals, promotion and relegation
The hosts, number one in FIFA's world rankings, were missing several players due to injury, with striker Romelu Lukaku ruled out a day before.
The picture is becoming clearer about who will take part in the finals next June, as well as which nations will be promoted and relegated.
Tin Jedvaj scored a dramatic stoppage-time winner to hand Croatia a 3-2 win over Spain in UEFA Nations League Group 4 on Thursday night.
Marco Reus wants to succeed Mesut Ozil in Germany's No. 10 position after a strong start to the season with Borussia Dortmund.
The Germans, bottom of Nations League Group 1 in League A with one point from three games, could be relegated as early as Friday.