Initial attempts to free the animal by slathering him in olive oil failed, with his huge behind preventing him from squeezing his way out.
He was finally freed after animal rescue services lifted off the cover and eased his head through the hole.
Locals have nicknamed the squirrel "Olivio" after his oily encounter.
After the ordeal on Friday, an exhausted Olivio was wrapped in a warm towel and fed glucose, local media report.
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Staff at a local animal shelter say Olivio is recovering well and has now moved on to a diet of Christmas nuts.
"He was almost dead," Sabine Gallenberger from the Squirrel Protection Association told German media.
"Now he is eating a lot and sleeps all the time."
The BBC was unable to verify the size of Olivio's behind.
A red squirrel who got stuck halfway through a manhole cover thanks to his curvy hips is recovering after a lengthy rescue operation in Munich.