Hingis was two points away from defeating eventual champion Venus Williams in the U.S. Open semifinals, but lost four straight games to suffer a heartbreaking defeat.
Before the U.S. Open, Hingis announced she would not represent Switzerland at the Olympic Games in Sydney, citing a hectic schedule which would not allow her to make the trip to Australia.
Hingis, who turned 20 Saturday, has won five titles this season, one behind Williams for the WTA Tour lead, and has compiled a 58-9 record. The top seed has won this event three of the last four years, including a 6-4, 6-1 win over Mary Pierce in last year's final.
Coming off a second-round loss at Sydney, second seed Conchita Martinez of Spain will seek her second title of the year in Germany, having won the German Open in May.
Nathalie Tauziat of France, who lost in the second round last week at Luxembourg, is seeded third, followed by Olympic quarterfinalist Arantxa Sanchez-Vicario of Spain, Amanda Coetzer of South Africa and Anna Kournikova of Russia, coming off a semifinal showing at Luxembourg.
Rounding out the top eight seeds are American Chanda Rubin and Dominique Van Roost of Belgium. Rubin has a tough first-round opponent in fellow American Jennifer Capriati, who captured her first title of the year at Luxembourg on Sunday.
Coetzer, the only seed in action, rolled into the second round by dumping Silvija Talaja of Croatia, 6-4, 6-0.
In unseeded play, Cara Black of Zimbabwe defeated Barbara Schett of Australia, 7-5, 6-1, and Patty Schnyder of Switzerland downed Ruxandra Dragomir of Romania, 6-3, 6-4.
The top four seeds received first-round byes. First prize is $87,000.