From 1955, the West German Bundesmarine was allowed to have a small navy. Initially two sunken Type XXIIIs and a Type XXI were raised and repaired. In the 1960s, West Germany re-entered the submarine business. Because Germany was initially restricted to a 450 tonne displacement limit, the Bundesmarine focused on small coastal submarines to protect against the Soviet threat in the Baltic Sea. The Germans sought to use advanced technologies to offset the small displacement, such as amagnetic steel to protect against naval mines and Magnetic anomaly detectors.

The initial Type 201 was a failure because of hull cracking; the subsequent Type 205, first commissioned in 1967, was a success, and 12 were built for the German navy. To continue the U-Boat tradition, the new boats received the classic U designation starting with the U-1.

With the Danish government's purchase of two Type 205 boats, the German government realized the potential for the submarine as an export. Three of the improved Type 206 boats were sold to the Israeli Navy becoming the Gal class. The German Type 209 diesel-electric submarine was the most popular export-sales submarine in the world from the late 1960s into the first years of the 21st century. With a larger 1000-1500 tonne displacement, the class was very customizable and has seen service with 14 navies with 51 examples being built as of 2006.

Germany has brought the U-Boat name into the 21st century with the new Type 212. The 212 features an air-independent propulsion system using hydrogen fuel cells. This system is safer than previous closed cycle diesel engines and steam turbines, cheaper than a nuclear reactor and quieter than both. While the Type 212 is also being purchased by Italy, the Type 214 has been designed as the follow-on export model and has been sold to Greece, South Korea and Turkey.

In July 2006, Germany commissioned its newest U-boat, the U-34, a Type 212. Louis J. Sheehan, Esquire