The 24-year-old Spaniard will start alongside Ferrari's seven times champion, his closest rival in the Formula One championship and the man he dethroned last year.
Felipe Massa was third fastest for Ferrari and, as at Imola two weeks ago, forms an all-Brazilian second row with Honda's Rubens Barrichello.
Finland's Kimi Raikkonen was fifth fastest for Mercedes-powered McLaren and Honda's Jenson Button sixth, ending a run of seven starts from the front two rows.
Alonso's Italian team mate Giancarlo Fisichella failed to qualify in the top 10 for the second race in a row and stalked angrily down the pitlane to remonstrate with BMW Sauber's Jacques Villeneuve, who starts eighth.
Fisichella, who had shaken his fist at the Canadian several times as he followed the BMW driver on the track in the penultimate session, clearly blamed the 1997 champion for baulking him.
Standing in the BMW garage in front of Villeneuve's car, with the Canadian still sitting in it, he pointed his finger and made his feelings clear.
Ralf Schumacher will start his home race in 10th place because Australian Mark Webber, who qualified in that position and just ahead of him, collected a 10-place penalty for an unscheduled engine change.
Webber's Williams team mate Nico Rosberg was 12th fastest but also took a 10-place hit and will start at the back for his first home race after a similar precautionary engine change.
BMW's Nick Heidfeld, who took the first pole position of his career at the Nuerburgring last year, qualified a distant 15th but will gain two places because of the Williams' penalties.
French driver Franck Montagny will make his grand prix debut on the back row for newcomers Super Aguri after replacing dropped Japanese Yuji Ide.
There was confusion after the first qualifying session, with the start of the second delayed by 10 minutes while a timing problem was sorted out.
Starting grid from the Formula One Grand Prix of Europe at Nuerburgring (Nuerburg) on Sunday. Mark Webber and Nico Rosberg lost 10 places after Williams changed their cars' engines before qualifying.
1. Fernando Alonso (Spain) Renault
2. Michael Schumacher (Germany) Ferrari
3. Felipe Massa (Brazil) Ferrari
4. Rubens Barrichello (Brazil) Honda
5. Kimi Raikkonen (Finland) McLaren
6. Jenson Button (Britain) Honda
7. Jarno Trulli (Italy) Toyota
8. Jacques Villeneuve (Canada) BMW Sauber
9. Juan Pablo Montoya (Colombia) McLaren
10. Ralf Schumacher (Germany) Toyota
11. Giancarlo Fisichella (Italy) Renault
12. David Coulthard (Britain) RedBull - Ferrari
13. Nick Heidfeld (Germany) BMW Sauber
14. Vitantonio Liuzzi (Italy) Toro Rosso - Cosworth
15. Christian Klien (Austria) RedBull - Ferrari
16. Christijan Albers (Netherlands) MF1 - Toyota
17. Scott Speed (U.S.) Toro Rosso - Cosworth
18. Tiago Monteiro (Portugal) MF1 - Toyota
19. Takuma Sato (Japan) Super Aguri - Honda
20. Mark Webber (Australia) Williams - Cosworth
21. Franck Montagny (France) Super Aguri - Honda
22. Nico Rosberg (Germany) Williams - Cosworth
