"After a lot of thought and given I had to take a quick decision, I took this one," he said after a meeting at the DFB headquarters.
"I am honoured by the Hamburg SV interest but I have a lot of work waiting for me here."
Sammer had been widely expected to join Hamburg given the ongoing power struggle between himself and national team coach Joachim Low over who controls Germany's youth teams, with Loew winning the latest skirmish over the future of Under-21 team coach Rainer Adrion.
"We are delighted that he can continue his hands-on youth work for us," said DFB chief Theo Zwanziger.
Hamburg, who have struggled in the league in the past few seasons, had seen in Sammer the perfect solution to complement coach Armin Veh in their bid to build a competitive team.
The 1996 European Footballer of the Year, who coached Borussia Dortmund to the Bundesliga title in 2002 and as a player won the 1996 European Championship with Germany, was appointed DFB sports director in 2006.
He won 23 caps for East Germany before a successful international career with the unified German team with whom he won another 51 caps.
