Rosberg now has a 5-4 advantage over Hamilton in poles this year and he has perfect opportunity to regain the momentum in their duel for the drivers' title.
Hamilton emerged shaken from his brake failure crash. But the accident was a major setback after he had reduced Rosberg's lead to just four points with a victory in the British Grand Prix where the German retired.
Hamilton spun into the barriers heavily at the Sachskurve, with seven minutes of the first qualifying session remaining. The right front brake disc of his Mercedes failed as he attempted to slow from an estimated 260 kph.
Hamilton was winded and shaken by the impact but climbed from his car and was able to walk away after a visit to the circuit medical centre.
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The 2008 world champion, will start Sunday's race in 15th position on the eighth row.
Rosberg who has never won the German Grand Prix, raced to the fastest laps in all three sessions, culminating in a blistering best of 1 minute 16.54 seconds to seize fourth pole in five races.
It also continued a memorable week for the 29-year-old German who married his long-term girlfriend Vivian Sibold, signed a new contract with Mercedes and cheered Germany to World Cup victory.
Australian Daniel Ricciardo again outgunned his Red Bull team-mate defending champion Sebastian Vettel of Germany by taking fifth place ahead of the title-holder with Fernando Alonso seventh for Ferrari.