There were ecstatic scenes at the full-time whistle as the German bench and players piled on top of one another.
Although, Die Nationalelf has recorded two World Cup triumphs and eight European Championship wins over the years, this was its first success on the Olympic stage.
And with the German men's team facing off against Brazil Saturday
, it could be a golden soccer weekend for Western Europe's most populous nation.
For German women's coach Silvia Neid, the success was the perfect sendoff in her last match after 11 years in charge.
Neid's side opened the scoring just after halftime when Dzsenifer Maroszan delightfully curled the ball home from the edge of the Sweden area.
The advantage was doubled on the hour mark when Sweden's Linda Sembrant inexplicably lashed the ball into her own net after a German free-kick attempt hit the post.
But the Swedes weren't done yet and pulled one back moments later when Stina Blackstenius slid in to reduce the deficit.
A frantic closing period saw the Scandinavians push for an equalizer -- making a mockery of the cowards tag previously given them by US goalkeeper, Hope Solo
-- but Germany always looked dangerous on the break.
The Germans could have added to their advantage on more than one occasion but were denied by Hedvig Lindahl in the Sweden goal.
"I'm very proud of my team. It's amazing. Unexplainable," goalscorer Maroszan told reporters. "It is a wonderful feeling. It was very motivating for us that the fans were cheering for Sweden."
Earlier Friday, Canada upset host nation Brazil 2-1 to claim bronze.
Deanne Rose and Christine Sinclair put the Canadians two goals ahead and, despite Beatriz pulling a goal back late on, Brazil couldn't take the game to extra time.