Genomic selection is widely implemented in livestock breeding programmes across species. Its potential is also evident for sheep breeding; however, it has several limitations, particularly because of the high genetic diversity across and within sheep breeds. In Germany, the predominant sheep breed is the Merino sheep. Until now, there has been no use of genomic selection in the German Merino sheep breeding programme. In this simulation study, different genomic selection strategies were compared with a reference scenario with a breeding value estimation based on pedigree BLUP. A simplified version of the German Merino sheep breeding programme, including a health and a production trait in the breeding goal, was simulated via the R package Modular Breeding Program Simulator (MoBPS). Real genotype data were used to create a population specific simulation. The reference scenario was compared with several alternative scenarios in which selection was based on single-step GBLUP (ssGBLUP) breeding value estimation with varying genotyping strategies. In addition to scenarios in which all male and all male plus all female lambs were genotyped, scenarios with a preselection of lambs, that is only a certain proportion (top 25%, top 50%) genotyped, were simulated. The results revealed that genetic gain increased with increasing numbers of available genotypes. However, marginal gains decreased with increasing numbers of genotypes. Compared with the reference scenario, genotyping the top 25% of male lambs increased the genetic gain for the breeding ram population by 13% for both traits whereas genotyping the top 50% of male lambs or all male lambs led to increases of 18% (17%) or 26% (21%) for the health (production) trait, respectively. The potential of genotyping females in addition to male lambs was less evident on the male side with no significant differences between the scenarios with different proportions of genotyped females. The results have shown that genomic selection can be a valuable tool to increase genetic gain in the German Merino sheep population and that the genotyping of a certain proportion of animals might lead to substantial improvement over pedigree-based breeding value estimation. Nevertheless, further studies, especially economic evaluations, are needed before practical implementation.