Daimler is the latest automaker to face questions over its diesel engines.
The German government summoned Daimler to appear before a commission on Thursday after local media reported that prosecutors were investigating possible cheating on emissions tests.
German newspaper Sueddeutsche Zeitung reported on Wednesday that prosecutors were investigating two engines used in over 1 million cars sold in the U.S. and Europe.
The newspaper said that state prosecutors in Stuttgart, Daimler's home town, were leading the inquiry. Prosecutors were not immediately available to comment.
The owner of Mercedes-Benz and Smart said it was cooperating fully with authorities, but declined to comment on specific accusations.
The automaker added that it saw no risks that regulators might revoke approval for its vehicles.
Shares in Daimler dropped as much as 2% on in early trading, before recovering some of their losses.
The commission that Daimler will appear before Thursday was established in 2015 to investigate Volkswagen's diesel scandal.
The German automaker has admitted to fitting as many as 11 million diesel vehicles worldwide with software that could cheat nitrogen oxide emissions tests.
Several other car makers have since been implicated in similar scandals.
-- Sally Manuela Eshun contributed reporting.