“We are proud of Jogi Loew. He has carried the name of Schoenau throughout the world,” mayor Peter Schelshorn told the DPA news agency.
Loew, 54, was born and grew up in the town in the Black Forest of southwestern Germany which now counts 2,300 inhabitants.
The city council unanimously voted on Monday night to make Loew an honorary citizen and also to rename the local stadium where the former midfielder played his first match after him.
Schelshorn said that Loew has already agreed to accept the honour and there would be “a grand reception” organised at a date has not yet been set.
Loew, who led Germany to their fourth World Cup title in Brazil and the first since reunification in 1990, is currently on holidays in Freiburg, southwest Germany.
Loew took over as German head coach in 2006 after two years as assistant.
And German Football Federation (DFB) president Wolfgang Niersbach said he believes Loew will honour his contract which runs until the 2016 European championship in France.
If he does his first task will be to find a new captain after defender Philipp Lahm’s surprise international retirement, with Bayern Munich midfielder Bastian Schweinsteiger favourite for the job.