The World Cup winner feels Joachim Low's side are the team to beat in Poland and Ukraine, as he lauded the qualities of tournament joint-top scorer Mario Gomez
Die Mannschaft were the only team in the tournament to win all their group matches as they managed to top the so-called "Group of Death" and set up a quarter-final meeting with Greece on Friday.
When asked who he thought were the strongest team in the tournament so far, Lippi told La Gazzetta dello Sport: "Germany. [They have] class and personality."
The 2006 World Cup winner also praised striker Mario Gomez, who is joint-top scorer of the tournament with three goals along with Russia's Alan Dzagoev and Mario Mandzukic of Croatia.
"Gomez is in a state of grace, if he has the ball, he scores goals. But there is not only Gomez, the Mannschaft have many other weapons too," he asserted.
Switching his attentions to Italy's fortunes, Lippi said the Azzurri did well to beat the Republic of Ireland 2-0 and seal qualification for the knockout stages of the tournament, but warned tougher tests lie ahead.
"We unlocked [Ireland] psychologically, then finally found the goals through [Antonio] Cassano and [Mario] Balotelli," he said.
"Now comes the hard part: the strength of rivals increases and the horizon is Germany."
Italy face Germany's bitter rivals England in Kiev in the final quarter-final on Sunday at 20:45CET.