Harry Kane’s 88th minute penalty – his 50th goal for the Three Lions – ensured Gareth Southgate’s side secured a point after Jonas Hoffman’s 50th minute strike had looked likely to earn the hosts victory.
It was Sterling’s 75th cap for England with Southgate’s side showing great heart to summon up a dramatic late comeback prompted by the introduction of Grealish on 70 minutes.
In front of a capacity crowd at the Allianz Arena in Munich this latest meeting between the two great rivals proved a high tempo and fiercely fought affair.
Walker needed to be alert to produce a key block to deny Thomas Mueller from close-range after just three minutes
And England had another let-off on 23 minutes when Jonas Hofman beat keeper Jordan Pickford from 18 yards only for the effort to be ruled out for offside.
However, Hofman wasn’t to be denied and he broke the deadlock with a fine 50th minute finish after latching onto Joshua Kimmich’s astute assist inside the England box.
Only a fine 70th minute save from Pickford then prevented Thomas Muller from doubling Germany’s lead.
However, the arrival of Grealish prompted a late England charge and only a stunning block from Manuel Neuer denied Kane a 73rd minute leveller after the England skipper had met Grealish’s superb low cross.
But with three minutes left, Kane was bundled over in the box by Nico Schlotterbeck as he sought to reach Grealish’s teasing ball.
And after a lengthy VAR check, referee Carlos del Cerro Grande pointed to the spot and Kane made no mistake firing home past Neuer with the skipper almost winning it late on from another superb Grealish assist.
With Italy beating Hungary 2-1 in Group A3’s other game on Tuesday it means Roberto Mancini’s side top the table with four points.
Hungary are second on three points, Germany third with two and England bottom on one.
The Three Lions are next in action on Saturday when they play host to Italy at Molineux.
Meanwhile, both Taylor Harwood-Bellis and Tommy Doyle started as England’s Under-21s beat Albania Under-21s 3-0 at Chesterfield to seal their qualification for the 2023 European Under-21 Championships.
Arsenal’s Folarin Balogun struck a brace of goals either side of half-time for Lee Carsley’s side with Aston Villa’s Cameron Archer adding a late third to secure the Young Lions’ position at the top of Group G.
The Under-21s are now three points ahead of the Czech Republic, who only have one match left and would finish below England if the two nations ended on the same points because of the head-to-head rule.
England are in action again on Friday when they travel to play Kosovo's Under-21s.