The road leading to the tournament stadium has been renamed after the Swiss, who has won the Halle title five times.
"It was this personal commitment to us and the fact that he is highly respected the world over that led us to consider how we could honour him," tournament director Ralf Weber said on Tuesday.
Federer, 30, has used the event in the sleepy Westphalia town for more than a decade to prepare for Wimbledon . Most of his top rivals opted in the past to play the event at Queen's in London.
World number one Novak Djokovic and world number two Rafa Nadal are set to join Federer at this year's tournament.