The ruling means Puigdemont, who fled Spain five months ago for Belgium after Spanish Prime Minister Mariano Rajoy dismissed his regional administration, can not be tried for rebellion in Spain once extradited on the lesser charge, a German court spokeswoman said.
Spanish authorities accuse Puigdemont of rebellion and misuse of public funds in organising an unauthorised referendum a year ago on the region's secession.
Spain issued a European Arrest Warrant for Puigdemont in March, shortly before his arrest in Germany.
It has asked for further information on these charges and set bail at €75,000.
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The MMA fighter was seen attacking a bus attempting to leave the Barclays Center in a recent video, according to a TMZ report . One thing is for sure, McGregor will certainly be facing legal trouble, and discipline from the UFC for this incident.
It wasn't immediately clear when Puigdemont will be released. His lawyers have said they will appeal.
The court, in Berlin, said the rebellion charge Puigdemont faced in Spain was not a criminal offence in Germany, while the violence component that would justify a high treason charge was also missing.
The court has been considering what to do about a Spanish extradition request for Mr Puigdemont for more than a week.
Reuters quoted a Spanish government spokeswoman as having said earlier that Madrid respected the German court's decision.
Kyrie Irving needs knee surgery, out for playoffs
The Celtics are seeded second in the Eastern Conference, behind the Toronto Raptors and ahead of the Cleveland Cavaliers in third. The team had said the knee was structurally sound and the kneecap healed, but the wire had been putting pressure on the knee.
The official, who spoke on customary condition of anonymity, said "Spanish justice will adopt the appropriate measures in the face of these new circumstances".
However, the court in the northern city of Schleswig said there could be a case to answer for misusing public funds last October to hold an unauthorised independence referendum.
Former Catalan separatist leader Carles Puigdemont has written an open letter from a German prison, urging Catalonia's parliament to make another attempt to elect jailed separatist activist Jordi Sanchez as the region's president.
The separatists' maneuvers come after a string of setbacks for their ambitions since October, with Spanish courts blocking moves toward independence and bringing charges against the movement's leaders.
Prince Philip admitted to hospital for planned hip surgery
Last June, Prince Philip spent two nights in hospital as a "precautionary measure" for the treatment of an undisclosed infection. There will be physiotherapy exercises to do at home and crutches are needed for about four to six weeks.
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