Ryanair said it will become the first low fares airline to open a base at Frankfurt am Main, which is Germany's biggest airport and the main home of Lufthansa.
The airline will start flying from Frankfurt airport to tourist destinations in Spain and Portugal.
The once-daily flights to Palma de Mallorca, Alicante, Malaga and Faro will start from the end of March.
The news will provide a further headache for Frankfurt's main customer Lufthansa, which has slowed growth at its main brand and has faced strikes while it tries to lower costs and expand its own budget unit Eurowings.
The Frankfurt base will be Ryanair's 85th in Europe and its ninth in Germany.
The airline's two based aircraft represents an investment of $200m. It said this further underlines its commitment to growing traffic, tourism and jobs in the Hessen region.
Ryanair has reported an increase in passenger numbers and its load factor for October.
The airline said it carried a total of 10.9 million passengers in October, up 13% on the same month last year.
Its load factor - how many seats it fills on each flight - also increased by 1% to stand at 95%.