The European Parliament's far-right Identity and Democracy (ID) group expelled the Alternative for Germany (AfD) delegation on Thursday, less than a month before elections to the assembly.
The decision comes after Maximilian Krah, the AfD's lead candidate in the elections, told an Italian newspaper at the weekend that the Nazi's Waffen SS were "not all criminals".
"The ID Group no longer wants to be associated with the incidents involving Maximilian Krah, head of the AfD list for the European elections," the ID group said in a statement.
It is the latest blow for Alternative for Germany (AfD) in a chaotic few months. France's Marine Le Pen abandoned the party earlier this week for being too toxic a partner.
Far-right parties in the European assembly are currently split between the European Conservatives and Reformists (ECR), whose de facto leader is Italian Prime Minister Georgia Meloni, and the ID group, spearheaded by Marine Le Pen's Rassemblement National (RN).
Polls suggest that nationalist and eurosceptic parties will win a record number of votes in the election.
AfD co-leaders Alice Weidel and Tino Chrupalla said in a statement that they took note of the ID's decision but were optimistic about the election.
"We are confident we will continue to have reliable partners at our side in the new legislative period," they said.
While it is still second or third in most national polls, support for the AfD has dipped by around eight points this year, hit by adverse court rulings, concerns about its links to China and Russia and revelations that senior party members had participated in talks about deporting non-ethnic Germans.
Krah, whose aide has been charged with spying for China, had to resign from the AfD's leadership board and promised not to make any further campaign appearances following his comment on the SS, although he is still a candidate in the European poll.
The SS, or "Schutzstaffel", was the Nazi's paramilitary force and played a leading part in the Holocaust.
In a highly unusual, last-ditch bid to avoid expulsion, the AfD delegation had asked the ID to exclude just Krah, blaming his personality, a letter seen by Reuters showed.
"We see this as the last (albeit desperate!) attempt to prevent the exclusion of the entire AfD delegation from the ID parliamentary group," wrote MEP Christine Anderson in the letter informing the party's executive board of the request.
