You can attempt several routes at the same time.
This infographic covers the basic.
For more details and advice, contact a lawyer or visit German home office near you.
Becoming German or Applying for German Citizenship (Einbürgerung)
German nationality law is the law governing the acquisition, transmission and loss of German citizenship. The law is based on a mixture of the principles of jus sanguinis and jus soli. In other words, one usually acquires German citizenship if a parent is a German citizen, irrespective of place of birth, or by birth in Germany to parents with foreign nationality if certain requirements are fulfilled. Naturalisation is also possible for foreign nationals after six to eight years of legal residence in Germany. However, non-EU and non-Swiss citizens must usually renounce their old citizenship before being naturalised in Germany. Citizens of other EU countries and of Switzerland usually can keep their old citizenship (see section "Dual citizenship"). Some EU countries do not allow dual citizenship even with other EU countries.
A significant reform to the nationality law was passed by the Bundestag (the German parliament) in 1999, and came into force on 1 January 2000. The reformed law makes it somewhat easier for foreigners resident in Germany on a long-term basis, and especially their children born in Germany, to acquire German citizenship.
The previous German nationality law dated from 1913. Nationality law was amended by the Nuremberg Laws of Nazi Germany; these amendments were revoked after the defeat of Nazism by an Allied occupational ordinance in 1945. Germany ratified the European Convention on Nationality, which came into force in Germany on 1 September 2005.
All German nationals are automatically also citizens of the European Union.
A child adopted by a German citizen becomes German national automatically if aged less than 18 on the date the application for adoption was made. So dual citizenship is granted.
Naturalisation as a German citizen by entitlement
An individual who fulfils all of the following criteria has an entitlement to naturalise as a German citizen:
1. he/she has been ordinarily resident in Germany for at least the last 8 years (this period can be reduced - see below)
2. he/she has legal capacity or a legal representative
3. confirms his/her present and past commitment to the free democratic constitutional system enshrined in the German Basic Law (or that he is presently committed to such principles and has departed from former support of ideas contrary to such principles)
4. he/she is a European Union or Swiss citizen in possession of the appropriate residence permit which permits the free movement of persons OR is a non-EU/Swiss citizen who has been granted a permanent right of residence
5. he/she is able to support himself/herself without recourse to benefits
6. he/she has not been sentenced for an unlawful act and is not subject to any court order imposing a measure of reform and prevention
7. he/she possesses an adequate knowledge of German
8. possesses knowledge of the legal system, the society and living conditions in the Federal Republic of Germany