DFB-Pokal holders Bayern Munich will host Hoffenheim in the last 16 of this season's competition, while two fourth-tier sides were handed home advantage.
Bayern were made to sweat in their second-round tie, needing two goals in the last seven minutes to scrape past second-tier strugglers Bochum.
Niko Kovac's side - who have won the tournament 19 times - beat RB Leipzig in last season's final and will be favourites against Hoffenheim in one of four all-Bundesliga ties.
Other clashes between sides in Germany's top tier see Eintracht Frankfurt host Leipzig, Schalke take on Hertha Berlin and Werder Bremen welcome Borussia Dortmund.
Interest in the fortunes of Saarbrucken and Verl will be high, with both sides playing in the regionalised fourth tier of German football.
Verl top the Regionalliga West table and will host Bundesliga opposition in Union Berlin, while Saarbrucken are also flying high in the league, sitting first in the Regionalliga South West standings.
Saarbrucken, who scored a stoppage-time winner to beat top-flight opponents Cologne 3-2 in the second round, will host 2. Bundesliga outfit Karlsruher.
Kaiserslautern, who have plummeted to the third tier in recent years, are in the relegation zone but have a chance to raise spirits when they welcome Fortuna Dusseldorf of the Bundesliga.
The other tie in the last 16 sees Bayer Leverkusen take on 2. Bundesliga high-flyers Stuttgart.
All third-round ties will be played on February 4 and 5.
DFB-Pokal last 16 draw
Eintracht Frankfurt v RB Leipzig
Bayer Leverkusen v Stuttgart
Bayern Munich v Hoffenheim
Schalke v Hertha Berlin
Saarbrucken v Karlsruher
Werder Bremen v Borussia Dortmund
Kaiserslautern v Fortuna Dusseldorf
Verl v Union Berlin