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Federal elections were held in Germany on 31 July 1932, following the premature dissolution of the Reichstag. The Nazi Party made significant gains and became the largest party in the Reichstag for the first time, although they failed to win a majority. The Communist Party increased their vote share as well. All other parties combined held less than half the seats in the Reichstag, meaning no majority coalition government could be formed without including at least one of these two parties.

Background
Since 1929, Germany had been suffering from the Great Depression; unemployment had risen from 8.5% to nearly 30% between 1929 and 1932, while industrial production dropped by around 42%. Over 6 million people were unemployed in 1932, and 40% of organized labour was unemployed or working reduced hours in summer 1932.

In March 1930, the governing grand coalition of the pro-republican parties–the Social Democratic Party (SPD), the Centre Party and both liberal parties–collapsed. President Paul von Hindenburg appointed a minority government, headed by the Centre Party's Heinrich Brüning, which could only govern by using Hindenburg's emergency powers. The September 1930 elections produced a highly fragmented Reichstag, making the formation of a stable government impossible. The elections also saw the Nazi Party rise to national prominence, gaining 95 seats.

Brüning's policies, implemented via presidential decree and tolerated by parliament, failed to solve the economic crisis and weakened the parliamentary system. In March 1932, the presidential elections began as a three-way race between the incumbent Hindenburg, supported by pro-democratic parties, against Hitler on the one hand and the Communist Ernst Thälmann on the other. Hitler received around a third of the vote and was defeated in the second round in April by Hindenburg, who won a narrow majority. However, at the end of May 1932, Hindenburg was persuaded to dismiss Brüning as chancellor and replaced him with Franz von Papen, a renegade from the Centre Party, and a non-partisan "Cabinet of Barons". Papen's cabinet had almost no support in the Reichstag. Only three days after his appointment, he was faced with such opposition that he had Hindenburg dissolve the Reichstag and call new elections for 31 July so that the Reichstag could not dismiss him immediately.

Campaign
Nazi membership rose from 293,000 in September 1930, to almost 1.5 million by the end of 1932. The amount of papers controlled by the party rose from 49 in 1930, to 127 by 1932. Völkischer Beobachter's circulation rose from 26,000 in 1929, to over 100,000 in 1931.

Joseph Goebbels was placed in charge of the Nazi's propaganda and campaign in 1930. Goebbels' staff was expanded and his role formalized by the Reich Propaganda Directorate (RPL) in 1931. In prior elections the Nazis relied on membership dues, but started receiving financial support from businesses in 1932. The ban on the Sturmabteilung and Schutzstaffel was lifted by Papen, against the pleas of state governments, in exchange for Nazi tolerance of his cabinet.

The German State Party (DSP) saw its membership in the Landtag of Prussia fall from 28 to 2 after the 1932 state election. The DSP unsuccessfully attempted to form an alliance with the SPD and Centre or the German People's Party (DVP). The DSP was able to form an alliance with the German National People's Party (DNVP).

Alfred Hugenberg attempted to make the DNVP a mass movement party following poor results in the 1930 election. The party's paramilitary groups were consolidated into the Bismarck League in the hope that it could combat the SA. The DNVP supported Papen's government.

Papen hoped that the election would weaken the left and centre. On 20 July, he dissolved the Social Democratic government of Prussia and instituted martial law after clashes between Nazis and leftists in Altona. The DNVP and DVP supported the decision. Goebbels told regional leaders to not discuss Papen on 4 June, but the RPL later stated that the Nazis "refuse most strenuously to be associated with this cabinet". The Communist Party (KPD) criticized Papen's actions as a "naked fascist coup", but also criticized the SPD for not retaliating.

The Centre accused the Nazis of being a pagan movement while the Nazis accused the Centre of working with anti-religious organizations that were equal to organization persecuting Christians in the Soviet Union and Spain.

Results
The Nazis, with 230 seats, held the largest seat total for a party in Weimar history. The elections resulted in significant gains by the Nazi Party and it became the largest party in parliament for the first time, but lacked an overall majority.

The Nazis and KPD held over half of the seats in the Reichstag. This made it impossible to form a government composed of moderates. Papen could only rely on the support of the DNVP and DVP, who only held a total of 44 seats. A vote of no confidence was put forward by the KPD and supported by 84% of the deputies. A new election was scheduled for November 1932.

Gregor Strasser attempted to form a coalition between the Nazis and Centre. The Nazis did not obstruct parliamentary procedure and in return the Centre voted to make Hermann Göring president of the Reichstag. Strasser opposed calling for a new election, fearing that support for the Nazis would decline.