"Those who offer products or services in the EU must adhere to EU data protection rights - no matter where the (computer) server is," said Heiko Maas in a statement.
The stunning ruling came after a challenge lodged by an Austrian law student and privacy campaigner against Facebook over the transfer of European users' data from its Ireland headquarters to servers in the United States.
Maas said the ruling was also "a mandate for the European Commission to fight for our data protection standards internationally".
Data belonging to European users must "also be effectively protected in the US," he said, adding that negotiations must be launched "immediately" with Washington following the ruling.