Earlier, US federal agents had detained John Demjanjuk at his home in Ohio, carrying him out in a wheelchair.
But a US federal appeals court granted an 11th hour stay of deportation after Mr Demjanjuk's family argued that he was too ill to be transported.
He is accused of being a guard at the Sobibor death camp in World War II.
Mr Demjanjuk denies the charges, claiming that he was captured by the Germans in his native Ukraine during the war and kept as a prisoner of war.
He was arrested at his home earlier on Tuesday and taken to a federal building in Cleveland, from where he was expected to be flown to Germany.
But the 6th Circuit US Court of Appeals intervened to prevent the deportation while it examined the case further.
A spokesman for Mr Demjanjuk's family said they were "delighted" by the decision.
"It's just a shame that Mr Demjanjuk had to go through the hell that he went through once again this morning," said Ed Nishnic.
Mr Demjanjuk's son, John Demjanjuk Jr, said if the "madness and inhumane action" of deportation was not stopped his father would die in hospital in Germany without standing trial.
He also criticised the manner of the arrest, saying the government had not kept a promise to give three to five day's notice of their arrival and to collect his father in an ambulance.
The US Immigration and Customs Enforcement (ICE) agency has said it will continue electronic monitoring of Mr Demjanjuk and will "work co-operatively with the Department of Justice and the government of Germany to effect [his] removal".
Israeli trial
Mr Demjanjuk arrived in the US in 1952 as a refugee, settling in Cleveland, Ohio, where he worked in the car industry.
In 1988, Mr Demjanjuk was sentenced to death in Israel for crimes against humanity after Holocaust survivors identified him as the notorious "Ivan the Terrible", a guard at the Treblinka death camp.
Israel's highest court later overturned his sentence and freed him, after newly unearthed documents from the former Soviet Union indicated that "Ivan the Terrible" had probably been a different man.
Mr Demjanjuk returned to the US, but in 2002 had his US citizenship stripped because of his failure to disclose his work at Nazi camps when he first arrived as a refugee.
In 2005, a US immigration judge ruled that he could be deported to Germany, Poland or Ukraine.
Germany issued a warrant for his arrest last month, and his family have been fighting to prevent him from being deported ever since.
He faces charges of aiding the death of 29,000 Jews.
