Officials from the bishopric of Osnabrueck in western Germany said on Sunday the priest has been stripped of his functions with immediate effect "following an allegation of a sexual offence".
"The clergyman admitted misconduct on Friday in a conversation with Bishop Franz-Josef Boden," the diocese said in a statement and added that the priest, who was not named, has turned himself in to prosecutors.
"The incriminating allegation had been reported to a diocese commission responsible for such cases."
No further details on the offence were provided, and it was not immediately clear whether the victim was a minor or an adult.
Fresh allegations of child abuse at Catholic institutions have surfaced almost daily in recent weeks in Germany, most dating back several years.
The pope has spoken out and apologised for the "heinous crime" of child sex abuse by priests, meeting victims in the United States and in Australia.
But critics have demanded the Vatican take more decisive action to address the problem.
The Vatican says it received 3,000 reports between 2001 and 2010 of sexual abuse of children by Catholic clergy committed over the past 50 years.
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