A laser is fired at a tiny vibrating mirror and this deflects the beam to produce the pixels that form the final image.
The miniature video projector can only presently work with red and blue lasers, meaning that any displays have a limited colour range but the researchers said once laser technology has progressed, their projector will offer a smaller, lighter and cheaper alternative to the classic system.
Dr Peter Schreiber, of the Applied Optics and Precision Engineering of the institute in Jena, said: "I think there are a lot of useful applications for such a device."