The report says that so far, it has not been possible to build an encryption device for secure data transfer into the jet, which entered service in the 1970s.
The communication devices of the Tornado also do not meet current standards, the report said, meaning there's a risk that information could be intercepted.
"This could in the worst case mean that the demand for an encrypted communication system for the Tornado weapons system can't be achieved. That means the Tornado weapons system may not take part in NATO missions," the report states.
A spokesman for the German air force said its 10 Tornado jets registered for the NATO Response Force met current requirements, without providing further details.
The report was first cited by German magazine Spiegel.
Germany wants to start phasing out the Tornado jets in 2025 and the defense ministry has said that the Eurofighter Typhoon is the leading candidate, with Lockheed Martin's F-35 and Boeing's F-15 and F-18 fighters also options.
An annual report released in February said Germany's military must move faster to tackle persistent gaps in personnel and equipment.