The results in Mecklenburg-Western Pomerania and in city elections in Berlin also reflected disenchantment with Chancellor Angela Merkel's left-right coalition government at the federal level.
The National Democratic Party won 7.3 per cent of the vote in Mecklenburg, a rural region next to the Polish border that includes Merkel's home constituency, up from less than one per cent in the previous state vote.
"That's the most depressing result," said Erwin Sellering, deputy leader in Mecklenburg of the Social Democratic Party, which lost ground in the vote.
"Depressing for us all because it was our common goal to prevent it."
Mainstream parties had called on voters to cast their ballot for anyone except the National Democratic Party.
Known by its German initials NPD, the party is a fringe player at the national level, where its affinities with Adolf Hitler's Nazis deters the vast majority of voters.
Former Chancellor Gerhard Schroeder tried to ban the party for fomenting violence against minorities, but the Supreme Court threw out the ban because the government's case rested on inflammatory statements made by government informants.
Since then, the party has gained a foothold in the economically struggling east, where in 2004 it won seats in the legislature in the state of Saxony by getting 9.2 per cent of the local vote.
The weekend results in Mecklenburg and Berlin were doubly worrying for Germany's dominant parties - Merkel's conservatives and her coalition partner in the current federal government, the Social Democrats.
Her Christian Democrats lost support in both regions compared with elections in 2001 and 2002, and polls say its popularity is eroding nationwide amid plans to hike taxes and rows over how to reform Germany's welfare state.