Twenty-nine German police officers have been suspended for sharing photos of Adolf Hitler and images of refugees in gas cameras on their phones.
Officials also used far-right chat rooms where swastikas and other Nazi symbols were shared, officials in North Rhine-Westphalia (NRW) said.
NRW Home Secretary Herbert Reul said it was a “disgrace to NRW police”.
This follows several other cases of far-right extremism among the German security services.
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More than 200 police officers have been involved in raids on 34 police stations and private homes involving 11 key suspects. Police allegedly shared more than 100 neo-Nazi images in WhatsApp groups.
Some of the suspects have been accused of spreading Nazi propaganda and hate speech. Others are accused of failing to report the actions of their colleagues.
“This is the worst and most repulsive kind of hate speech,” Mr Reul said, adding that he expected the investigation to find more offensive chats.
“I am horrified and ashamed,” said Frank Richter, police chief in the city of Essen, where most of the suspects were. “It’s hard to find words.”
Mr Reul has now launched an investigation into the degree of extremism among the state police.
“Right-wing extremists and neo-Nazis have absolutely no place in the North Rhine-Westphalia police, our police,” he said, and authorities had to show a “crystal clear political profile” that rejected the far right.
German police and security services have been accused of not doing enough to eradicate extremists from their ranks.
In July, prosecutors said they had arrested a former police officer and his wife on suspicion of sending threats to prominent immigrant figures, including several ethnic Turkish lawmakers.
The scandal has already seen Hessen state police chief Udo Munch resign after it became clear that police computers had been used to find details of a left-wing politician who later received one of the threatening emails.