The article examines the problem of “internal emigration” in German literature and its connection with “German magical realism”, highlights the history of the origin and study of the term and trends in its interpretation in different historical periods from the mid-forties to modern times. The paper notes that most works of “magical realism” were unfairly on the periphery of the literary process because they were written during Hitler’s dictatorship. The author of the article states a certain categorical disparity in the definition and classification of works of “magical realism”, when not formal and aesthetic features are considered, but political and historical criteria. The rhetoric of the “Great Discussion” not only actualized, but also strengthened the pejorative nature of the phrase “internal emigration”. The controversy over the definition of the concept and its conceptual content has led to the fact that “internal emigration” was perceived as a manifestation of adaptation, self-justification and unwillingness to admit guilt. The semantics of the term, however, is changing along with scholars’ efforts to shed light on this controversial discourse. The writers’s being in “internal emigration” not only removes the question of the legitimacy of their work, but also opens a new layer for scientific research, in particular, study of the use of techniques of covert writing and means of expression of alienation. The works of German magical realism with the characteristic expansion of reality in their genre through the creation of unreal dimensions can be considered as a certain expression of internal exile. The metaphorical nature of the texts can be seen as a manifestation of introspective self-immersion of the authors, an expression of their separation from the political system and solitude in the inner world. The author of the article suggests that there is a certain coherence between German magical realism and the phenomenon of “internal emigration”. Hermeneutic analysis of the works of the authors of “internal emigration”, representatives of German “magical realism” must include a study of the historical context and autobiography of the writer.