This paper examines the current reform of the German armed forces and how ongoing reorganization is being influenced by a new security policy and threat analysis. The thesis is that the ongoing transformation of the Bundeswehr is in line with Germany's expanded security role and reflects an appropriate adjustment to post Cold war realities. However, there are concerns that an unsuitable defense budget may prevent Germany from attaining its stated reform goals and therefore from fulfilling its commitments to the European Union and NATO.