It was claimed that a company run by Löbel had earned commissions of €250,000 for brokering face mask contracts between manufacturers and German authorities.
ADVERTISEMENTA German MP from Chancellor Angela Merkel's party will resign over a scandal that he benefitted from face mask purchases.
Nikolas Löbel, a backbench MP, was criticised by members of his own centre-right Christian Democratic Union (CDU) after the allegations emerged on Friday.
It was claimed that a company run by Löbel had earned commissions of €250,000 for brokering face mask contracts between manufacturers and German authorities.
The MP admitted on Sunday that he had made a mistake and should have been "more sensitive".
Löbel announced that he would leave parliament's foreign affairs committee immediately and give up his seat at the end of August.
Germany is due to hold a national parliamentary election, to determine who succeeds Chancellor Merkel, in September.
Meanwhile, regional government elections are also being held in Löbel's home state of Baden-Wuerttemberg later this month.
The scandal comes as another centre-right lawmaker, Georg Nüßlein, faces a corruption investigation in Munich related to mask procurement deals. He denies wrongdoing.
On Friday, Nüßlein's lawyer said the MP would not run for reelection in September and is giving up his position as a deputy leader of the Christian Social Union's parliamentary group.
Germany's Defense Minister Annegret Kramp-Karrenbauer, who led the CDU until January, tweeted that both MPs should "immediately resign their mandates in the Bundestag".
"I find it deeply indecent that parliamentarians have enriched themselves by procuring masks in the most serious crisis since the Second World War," added the party's Secretary-General, Paul Ziemiak.
"The citizens of this country, the members of the CDU and myself, have no sympathy for this.
"This does not meet the moral standards of the Union. As Secretary-General of the CDU, I expect this misconduct to be clarified and completely eradicated. Not at some point, but now."