The explosion occurred after a digger accidentally struck the device during excavation work in Euskirchen in the state of North Rhine-Westphalia.
The accident, in which two of the wounded suffered serious injuries, shook an industrial area in the town, near the former capital Bonn in western Germany.
“During earthworks an excavator hit a World War II bomb which exploded,” a local police spokesman said.
“There was a huge blast wave. In the vicinity of the accident site and surrounding streets, home windows shattered and garage doors were pushed in.”
The ground below many Germany cities still contains unexploded ordnance dropped by Allied and Soviet forces in the Second World War, but most is safely defused when found.