Germany has some of the tightest citizenship requirements among all the European countries. There are no givens when it comes to citizenship, and there's no automatic adjudication of naturalization. Anybody who isn't a child of a German citizen--and born in Germany himself--will need to go through a process of naturalization.
Up until January 2000, the only way to obtain German citizenship was through Jus sanguinis (blood rights), which meant that only children of German citizens could obtain the citizenship. Jus sanguinis does not relate to place of residency, which means children born overseas--on or after January 1, 1975--could become German citizens as long as one of the parents was already one. For those born before that date, citizenship can only be obtained if the father is German-born.
In January 2000, a new law was passed to help long-term legal residents of Germany obtain German citizenship. Citizenship by naturalization can be obtained by legal residents of Germany who have been in the country for at least eight years and who can prove command of the language.
Children who are born in Germany do not automatically get German citizenship unless the parents are German. For children of foreign parents, the process of obtaining citizenship requires several steps. For starters, at least one of the parents must be a legal resident of Germany for at least three years before the birth of the child. The citizenship is then given on a provisional basis, and it must be reclaimed by the child himself before the age of 23.
People who marry a German citizen and reside within Germany for at least three years will be able to obtain citizenship. The laws apply even if the marriage dissolves before the three years are met (but as long as it has lasted for at least two).
Former German citizens, particularly those who had to flee Germany during the Nazi regime or who lost their citizenship at the time, can have the citizenship returned to them without a need for proving residency first. Refugees also apply under special rules, and they will only need to wait six years (rather than eight) before being able to apply for naturalization.