The Federal Intelligence Service (BND) says items bearing its logo are so popular that it will open a shop in Berlin next year.
The shop will sell t-shirts, pens, calendars, rulers, stationery, jackets as well as the underwear.
"We believe there is genuine public interest," said BND spokeswoman Michaela Heber.
"There's been a clear increase in demand, especially since other foreign intelligence agencies such as the CIA started selling their own t-shirts and the like."
New image
As a special feature, men's underwear will carry warnings such as Verschlusssache (Classified,) Streng Geheim (Top Secret), Amtlich Geheim Gehalten (Confidential) - and of course the "BND" logo will feature prominently.
The BND insists the merchandising campaign is a serious initiative.
"I suppose the underwear could seem like a joke to some," Ms Heber said. "But all in all I think the venture will only help us."
Correspondents say the intelligence service has been trying to improve its public image under its current head, August Hanning, who took over in 1998.
Items bearing the BND logo, such as t-shirts and calendars, are already on sale to employees at the service's headquarters in Pullach, near Munich.