Duval led by 1.3 seconds in his Citroen after six of 19 special stages.
"I never really counted on this result," Duval said. "But the special stages were very similar to the ones in the Belgian championship, so I didn't have to make many adjustments."
Loeb, who is the defending world champion for Citroen, has won all five German rallies since the event was first held in 2002.
"It's going to be a highly interesting contest and I'd like to win it," the Frenchman said.
Gronholm is coming off a victory in his native Finland, his fourth this year. After nine of 16 events in the season, Gronholm has 75 points and Loeb, three-time world champion, has 62.
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