The June 6-14 tournament replaces the former red clay event that ran until 2014 and will be staged the week after the French Open.
"Last time I played there it was a different event, on clay. This time it will be on grass court and I’m really looking forward to return to Stuttgart,” Nadal said in a statement.
With the introduction of a three-week interval between Roland Garros and Wimbledon, Germany will host two men's grasscourt events from this year.
Stuttgart joins Halle on the ATP calendar in the run up to Wimbledon, which begins on June 29.
(Reporting by Karolos Grohmann, editing by Pritha Sarkar)
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