The front left wheel on the Mercedes appeared to lock up as the Briton approached the stadium section of the circuit, with the car spinning sideways and into the tyre wall on a blisteringly hot afternoon.
Hamilton, who is four points behind championship leading team mate Nico Rosberg in the overall standings at the halfway point in the season, stepped out of the car and went to the medical centre for checks.
"I'm OK. I hit the brakes and something...the brakes failed," he said over the car radio. The session was halted for nine minutes before resuming.
The team confirmed the car's right front brake disc had failed in the initial phase of the session at their home circuit.
Qualifying had to be halted for nine minutes after the crash, which happened within sight of the Mercedes Grandstand at the Stadium complex.
Lewis Hamilton of Mercedes (AFP)
Hamilton had been second fastest when his front left wheel locked up, while a puff of smoke could be seen from the right side.
The car spun sideways and into the tyre wall on a blisteringly hot afternoon with track temperatures of 56 degrees Celsius.
The team reported the driver, whose lap time meant he was likely to qualify 16th for Sunday's race, was "OK but sore from the crash".
"I'm OK. I hit the brakes and something...the brakes failed," Hamilton had said over the car radio.
Rosberg was fastest in the first two parts of qualifying and looking likely to start on pole.
The crash continues a run of bad luck for 2008 champion Hamilton, who has retired from two races this season while Rosberg suffered his first blank in Britain two weeks ago.
Hamilton won that race at Silverstone, despite making a big error in qualifying when he thought he had done enough for pole only to see others go faster in the final seconds, to slash Rosberg's lead from 29 points to four.
Qualifying from the Formula One German Grand Prix at Hockenheimring on Saturday
1. Nico Rosberg (Germany) Mercedes 1:16.540
2. Valtteri Bottas (Finland) Williams-Mercedes 1:16.759
3. Felipe Massa (Brazil) Williams-Mercedes 1:17.078
4. Kevin Magnussen (Denmark) McLaren 1:17.214
5. Daniel Ricciardo (Australia) RedBull - Renault 1:17.273
6. Sebastian Vettel (Germany) RedBull - Renault 1:17.577
8. Daniil Kvyat (Russia) Toro Rosso - Renault 1:17.965
9. Nico Huelkenberg (Germany) Force India - Mercedes 1:18.014
10. Sergio Perez (Mexico) Force India - Mercedes 1:18.035
- - - - - - - - - -
11. Jenson Button (Britain) McLaren 1:18.193
12. Kimi Raikkonen (Finland) Ferrari 1:18.273
13. Jean-Eric Vergne (France) Toro Rosso - Renault 1:18.285
14. Esteban Gutierrez (Mexico) Sauber - Ferrari 1:18.787
15. Romain Grosjean (France) Lotus - Renault 1:18.983
16. Lewis Hamilton (Britain) Mercedes
- - - - - - - - - -
17. Adrian Sutil (Germany) Sauber - Ferrari 1:19.142
18. Jules Bianchi (France) Marussia - Ferrari 1:19.676
19. Pastor Maldonado (Venezuela) Lotus - Renault 1:20.195
20. Kamui Kobayashi (Japan) Caterham - Renault 1:20.408
21. Max Chilton (Britain) Marussia - Ferrari 1:20.489
22. Marcus Ericsson (Sweden) Caterham - Renault
1-10: third and final qualifying session
11-16: second qualifying session
17-22: first qualifying sessio
- Motor Racing
- Sports & Recreation
- Nico Rosberg
- Lewis Hamilton