The winger, who made 28 appearances for Pompey after signing from Bari last summer, has signed a four-and-a-half-year deal.
Norwegian international Huseklepp scored six goals for the south coast club before joining Birmingham on loan when financial troubles engulfed Portsmouth.
Blues boss Michael Appleton told the club's official website: "Erik was a regular in the side before the situation changed dramatically here and he had to go out on loan. He was unlucky because after playing regularly for us things didn't quite work out for him at Birmingham.
"I think Erik feels going back to play in Norway will be best for his international career and we wish him all the best."
Germany is one of the top teams ever and they will play the US on Sunday.
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Support the USA national team with an official 2013 Centennial soccer jersey from Nike. Its Official.