The administrator of the cemetery in Wunsiedel said the bones were exhumed on Wednesday morning.
Andreas Fabel says the remains were cremated and the ashes scattered into a lake whose name is being kept secret.
He says Hess's relatives and Lutheran church authorities in the town both agreed to the solution.
Hess was captured in 1941 when he parachuted into Scotland on a bizarre mission to negotiate peace between Britain and Germany. The attempt was denounced by Hitler.
He hanged himself at age 93 in West Berlin's Spandau prison, and was buried in his family's plot in Wunsiedel.