Details of snooping programmes involving the transatlantic allies have been leaked to the media by Edward Snowden.
The revelations have sparked widespread outrage in Germany, where elections are due next month.
The agreement dates from 1968-1969, and its cancellation is largely symbolic.
German Foreign Minister Guido Westerwelle said in a statement: “The cancellation of the administrative agreements, which we have pushed for in recent weeks, is a necessary and proper consequence of the recent debate about protecting personal privacy.”
Germans’ experience of mass surveillance under the Communist and Nazi dictatorships makes them particularly sensitive to perceived infringements of personal privacy, and the country has strong data protection laws.
The agreement cancelled on Friday gave the Western countries which had troops stationed in West Germany – the US, the UK and France – the right to request surveillance operations to protect those forces.
A German official told the Associated Press news agency that the agreement had not been invoked since the end of the Cold War, and admitted that the decision would have no impact on current intelligence co-operation.
A spokesperson for the UK’s Foreign Office told reporters that the agreement had not been in use since 1990.
Henning Riecke of the German Council on Foreign Relations told AP that the German government needed to do something to demonstrate at home that it was taking the issue seriously.
“Ending an agreement made in the pre-internet age gives the Germans a chance to show they’re doing something, and at the same time the Americans know it’s not going to hurt them.
“Given the good relations between the intelligence agencies, they’ll get the information they need anyway,” he said.
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