The lender will raise 6.25 billion euros in a rights issue, where shares are sold to existing investors. At the same time, the Qatari royal family has agreed to buy 60 million of the shares with its investment vehicle Paramount Holdings, valued at 1.75 billion euros the bank said.
Read MoreDeutsche Bank profit dips as plans to raise capital
Shares fell as much as 2.8 percent in early Monday trading, before paring losses following the announcement.
The move comes as European banks are being forced to take action if they fail to meet capital requirements in stress tests and the bank aims take boost its investment and retail banking arms.
The capital raise will take Deutsche Bank's core Tier 1 capital level, a key measure used by regulators to assess a bank's financial strength, to 11.8 percent from current level of 9.5 percent.
Read MoreDeutsche Bank co-CEO: 2015 targets 'highly achievable'
"We see tectonic plate shifts in European banking. We're taking the steps to increase our capital reserves, to position Deutsche Bank ahead of, and to take advantage of the very significant changes in the operating environment that we see coming," he said.
The bank reported an 11 percent drop in revenues from the previous year at the end of April due to litigation costs. The lender said at the time it planned to tap investors for 1.5 billion euros in contingent convertibles -- or "co-co bonds" which can either be converted into equity or written off -- in order to boost its capital strength.
Correction: An earlier version of this story provided an incorrect figure for the capital increase. The correct figure is 8 billion euros