Germany captain Felix Passlack, who is on the books at Borussia Dortmund, finished off a blistering counter attack after 14 minutes to open the scoring.
The Joey’s responded positively; troubling the European giant with a set piece and then Pierce Waring should have equalised but could not beat Constantin Frommann when presented with a one-on-one opportunity.
Werder Bremen’s Johannes Eggestein then grabbed a double to make it 3-0 before half-time, taking advantage of any opportunities presented by some lacklustre Joeys defending.
Australia coach Tony Vidmar adjusted his formation after the break, moving to a 4-2-3-1 without the ball - which denied Germany as many chances as they had enjoyed in the first half.
Waring, who plays for Melbourne Victory’s youth team, gave the Joeys hope of a comeback in the 54th minute when he lobbed Germany’s goalkeeper with a smart lob.
Perry Fotakopoulos and Joshua Laws both had chances to reduce Germany’s advantage, but missed out due to a combination of good goalkeeping and bad luck.
However, any Aussie hopes were dashed just 11 minutes later when Vitaly Janelt fired home from outside the area with a brilliant strike to make it 4-1.
Australia finished strongly in the closing stages, forcing a number of free-kicks in dangerous areas, but although Jake Brimmer went close on a few occasions, he could not find a way past Frommann.
Australia faces Mexico on Thursday morning, and then Argentina on Sunday as it looks to progress from the toughest group in the tournament.
In the day's late game in Group C, Mexico accounted for Argentina 2-0.
Kevin Magana opened the scoring on 10 minutes before Francisco Venegas slotted home from the penalty spot on 77 minutes to seal the points.
In Group D, Ecuador accounted for Honduras 3-1 while Belgium and Mali played out a goalless affair in Group D.