The country's Office for the Protection of the Constitution (BfV) announced Tuesday that it would focus on two elements: the AfD youth wing, 'Junge Alternative' (JA), and the party's far-right politician Björn Höcke and his supporters.
BfV President Thomas Haldenwang said JA members showed ''clear evidence of an anti-immigration and particularly anti-Muslim attitude,'' which is contrary to Germany's democratic principles.
Haldenwang said Höcke and his supporters, known as 'der Flügel' or 'The Wing,' propagate political rhetoric that violates Germany's constitutional protections of human dignity, democracy and the state of the law.
In a statement, Haldenwang said 'The Wing' is aimed at 'excluding and denouncing foreigners, migrants, Muslims in particular, and persons having a different political opinion and depriving them of almost all of their rights.'
In 2017, Höcke made a controversial speech in Dresden, where he called on Germany to stop feeling guilty about Nazi atrocities.
He said Germans were the 'only people in the world who planted a memorial of shame in the heart of their capital,' referring to the Holocaust memorial unveiled in Berlin in 2005.
Höcke also said Germany needed to make a '180-degree turn'' when remembering its past and labeled the country's citizens as 'brutally defeated people.' He later described criticism of his remarks 'a malicious and deliberately denigratory interpretation' of them.
On Tuesday, the BfV said it plans to keep the entire AfD as a 'subject of investigation' but suggested that it didn't have enough evidence to launch a full investigation.
'Certain social climate'
The AfD has responded with outrage to the BfV's decision.
Party leader Alexander Gauland said at a press conference on Tuesday that he intends to take legal action against the move.
'We consider the arguments to be unsustainable and believe that a certain social climate, some political pressure, has led to this,' Gauland said.
Björn Höcke said on Twitter: ''I am really sorry for the officials who have to kill their time looking for things that do not exist.'
Addressing the BfV plans, Germany's Foreign Minister, Heiko Maas, said on Twitter: 'People who discriminate against people because of their descent are racist and nationalist. Parts of the #AfD are cases for the constitution protection. But with an observation the problems are not solved. Must deal with AfD above all objectively and politically.'
In September 2017, the AfD became the first far-right party to enter Germany's parliament, the Bundestag, in almost 60 years.
It gained around 13% of the vote, a result described by leading party figures as a 'political earthquake.'
Formed in 2013 as an anti-European Union party in response to the European debt crisis, the AfD has since turned its focus to immigration and Islam.
The party's election manifesto said that 'Islam does not belong to Germany,' and that Germany's Muslims are 'a big danger for our state, our society and our system of values.'
The party has also called for an upper limit on the number of refugees allowed to enter the country, 'for the protection of Germany,' and insists that the country should accept only migrants with high technical skills.
In 2016, then co-leader Frauke Petry caused controversy when she suggested that police should be allowed to use firearms against illegal migrants on Germany's border, Reuters reported.
The AfD has taken other controversial positions on key issues in the past. In 2017, prominent AfD politician Beatrix von Storch dismissed the current debates around gender identity and LGBT rights as 'foolish nonsense.'
And last summer, the AfD marched with other far-right groups as thousands of people took to the streets of Chemnitz to protest against migrants.
The protests saw some call for the return of Nazism and for foreigners to leave Germany. It was the biggest display of far-right sentiment in the country for many years and triggered a national debate.
The influx of refugees to Germany during the European migrant crisis has energized the political right, and the number of xenophobic attacks has increased.
At the height of the migrant crisis, German officials said in 2016 that hundreds of asylum seekers and refugees were injured in more than 3,500 attacks on them and their shelters throughout the country, a substantial increase in attacks from the previous year.
Latest statistics also show that the number of anti-Semitic crimes in Germany rose by 2.5% in 2017, which added to fears of growing hostility in the country, Reuters reported.
'We consider the arguments to be unsustainable and believe that a certain social climate, some political pressure, has led to this,' Gauland said. The AfD has taken other controversial positions on key issues in the past. In 2017, prominent AfD politician Beatrix von Storch dismissed the current debates around gender identity and LGBT rights as 'foolish nonsense.' The AfD has responded with outrage to the BfV's decision. The party's election manifesto said that 'Islam does not belong to Germany,' and that Germany's Muslims are 'a big danger for our state, our society and our system of values.'
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