Mathias Cormann has received an award considered the highest tribute Germany can bestow on individuals.
The finance minister was on Tuesday presented with the Grand Cross of the Order of Merit by German Ambassador to Australia Dr Anna Prinz.
The order is awarded to Germans and foreigners for achievements in the political, economic, social or intellectual realm.
Senator Cormann grew up in the German-speaking part of Belgium.
Dr Prinz said the order honoured the senator's great achievements in advancing German-Australian relations.
"He is a person of trust and his energy reminds me of a train running very fast," Dr Prinz told AAP.
German State Minister Maria Bohmer in a video message praised Senator Cormann's passion.
"You quickly managed to convince me of the enormous potential that lies in a closer relationship between Germany and Australia. I too became inspired," she said.
Senator Cormann organised a special German-Australia conference in Perth last year, where he fulfilled a teenage dream of singing and dancing on stage to the 1980s hit song 99 Luftballons with German artist Nena.
