Almost 200 mosques, flats and offices were raided in Germany on Tuesday because they had links to the radical Islamist group, "True Religion".
Thomas de Maiziere, the German interior minister, announced the group had been banned because it was a "collecting pool" for jihadists. The group, also known as READ as a command to read the Qur'an, is one of the most recognisable proselytising Muslim groups in Germany.
But De Maiziere said it had persuaded 140 people to join militants in Iraq and Syria.
The move comes as German Chancellor Angela Merkel is under pressure to harden her line on security after several attacks claimed by Islamic State across Europe.
De Maiziere said Tuesday's raids in 10 German states were the biggest crackdown on any group since the government shut down a movement known as Kalifatstaat (Caliphate State) in 2001.
The group is known for distributing English or German translations of the Qur'an to young people. But de Maiziere said this was not the reason for the ban.
"Today's ban is rather directed against the abuse of religion by people propagating extremist ideologies and supporting terrorist organizations under the pretext of Islam," he said.
The Bundesverfassungsschutz, Germany's equivalent of the UK's MI5 as a domestic intelligence agency, estimates that there are about 40,000 Islamists in Germany, including 9,200 ultra-conservative Islamists known as Salafists.
Hans-Georg Maassen, head of the agency, told Reuters on Tuesday: "There are about 500 people that the police consider dangerous.
"We remain a target of Islamic terrorism and we have to assume that Islamic State or other terrorist organizations will carry out an attack in Germany if they can."
Fears about the number of migrants entering the country have boosted support for Alternative for Germany (AfD), a populist party that says Islam is incompatible with the constitution and has siphoned off support from Merkel's conservatives.
Additional reporting from Reuters.
