The officers from the police department in the small town of Kusel had been on a routine patrol, police in the nearby city of Kaiserslautern said.
The shots were fired during a traffic check on district road number 22 in the village of Ulmet at approximately 4.20am.
When reinforcements arrived at the scene, it was too late for the 24-year-old policewoman and her 29-year-old male colleague.
Before they died, the police officers were able to radio their colleagues with the words "they're shooting".
Previously, the officers had reported the discovery of a dead game animal in the vehicle.
The two victims were travelling in a police car with no markings at the time of the patrol, a spokesperson for Kaiserslautern police said.
However, the two had been in uniform and were wearing safety vests.
The 24-year-old was still in training to become a police officer, the GdP police union said.
Germany's interior minister expressed her disgust at the fatal shootings.
"Regardless of the motive behind the crime, this act is reminiscent of an execution, and it shows that police officers risk their lives every day for our safety," Nancy Faeser said.
"My thoughts are with the families, friends and colleagues of the victims. We will do everything we can to catch the perpetrators," she added.
Sources involved in the investigation told the DPA news agency that police are searching for a suspect who is already known to the authorities.
He is said to have fled from an accident scene in the past and owns a weapons permit.
"We are working on the assumption that there were several armed culprits," a police spokesperson said in Kaiserslautern.
It appears that the officers had approached the vehicle and were already conducting the traffic check when shots were fired.
The male police officer fired his own weapon several times at the scene, sources said.
His younger colleague did not appear to use her weapon.
She is thought to have died instantly.
Police would not confirm whether they were shot in the head.
The safety vests would have covered them from their hips to their necks.
A post-mortem examination is expected to be ordered.
No information was available on the getaway car or the direction in which the suspects fled.
District road 22 is fully closed near Mayweilerhof and Ulmet.
Police are asking residents not to pick up hitch-hikers in the district of Kusel.
Evidence was secured at the scene and a police spokesperson said investigators were leaving "no stone unturned".
Officers are also following up on more than 50 tip-offs from the public, although it is unclear whether there are any genuine leads.
Malu Dreyer, premier of the state of Rhineland-Palatinate in which Kusel is situated, expressed her shock at the killings.
"Our thoughts are with the relatives," Dreyer said in a joint statement with state interior minister Roger Lewentz.
"The crime is horrific. We are very upset that two young people have lost their lives in the line of duty," they added.
Flags were flying at half-mast in the state as a sign of mourning.
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