"By the end of 2023 at the latest, German soldiers are to end their involvement in the UN blue helmet mission MINUSMA," the source said.
German forces have faced increasing difficulties in recent months and have repeatedly had to suspend reconnaissance patrols after being denied flyover rights.
A spokesman for the Germany army on Tuesday told German media the troops had been unable to carry out aerial reconnaissance by drone for more than a month.
"Ground-based reconnaissance continues to take place, but without the supporting reconnaissance from the air," the spokesman told the Bavaria Media Group.
The German military have been in Mali since 2013 with a presence of up to 1,400 soldiers as part of the MINUSMA mission.
The German troops are in part meant to make up for the loss of French soldiers, after Paris pulled its forces out from the country earlier this year.
Britain and Ivory Coast had already said earlier this week they would be withdrawing from the mission.
Britain said Mali's military rulers were "not willing to work with us to deliver lasting stability and security".