The princess is shown in conflict with Ms Parker Bowles
The two hour long show, Lady Di - Diana - A Smile Charms the World, was watched by an audience of about 1,600 people in Saarbruecken.
It is unlikely that the show will be staged in the UK for some time, but there were some British audience members who enjoyed it.
"It was a must-see for me," said Sarah Elliott who is studying at Saarbrueken University.
"You just couldn't do this at home."
The show's German producer Karl-Heinz Stracke says discussions are underway to bring it to London but said that it would not happen for some years "out of respect".
It is performed in German for now, but will switch to English when it moves on a tour of the Netherlands, Denmark, Sweden and Finland.
The musical interprets the story of Diana's life from her first public appearances to her now famous interview with Martin Bashir to her last evening in Paris.
Naive
UK actress Karen Gillingham stars as Diana who is portrayed as an innocent battling against Camilla Parker Bowles, played by Katherine Glasson.
Parker Bowles is depicted laughing at the Princess's naive belief in love while seducing Prince Charles.
This is only the latest in a line of art events based on or dedicated to Diana, Princess of Wales in the four years since her death.
Much of it has met with public outcry.
Earlier this year an exhibition featuring a line drawing of Princess Diana by a convicted murderer was banned in New York.
In 1999 a statue portraying her as the Virgin Mary went on display in Liverpool and was called "deeply offensive".
And a controversial Russian sculptor, famed for a 660-tonne statue of Christopher Columbus, created a two metre statue of the Princess earlier this year.
More recently the princess was one of the subjects of an exhibition entitled Abused.