Although it has been in operation since 1998, its director, Martin Walde, chose to delay the official launch until now.
"I felt the time was right," he said. "When I first came to Vilnius I ran German cultural programs by myself from a suite at the Hotel Narutis. Now we have two buildings, a sizable full-time staff and by having organized many cultural events we have raised our public profile."
About 120 people from many different walks of Lithuanian life attended the inauguration - city officials, academics and representatives of other European cultural institutes in the city.
Walde had the good fortune of being able to lease the building adjoining the original premises, allowing him to expand the institute without having to move to a larger space. The new building houses the Institute's German language department run by Christiane Barchfeld, who joined her Vilnius colleagues from Manchester this past January.
"There are 150,000 people studying German at different levels in Lithuania. This is as many as those in Latvia and Estonia put together," she said.
Unlike in other cities, Vilnius' Goethe Institute does not offer language courses itself but collaborates closely with Lithuanian educational institutions, especially the public service language school, to improve the quality of instruction. Barchfeld and her team organize school competitions, cultural venues for young people and travel throughout the country visiting German instructors.
While she admits that it is difficult to compete with English in terms of its popularity as a second language, she nevertheless sees much interest in German among young people here.
"As Lithuania approaches joining the EU people should be multilingual," she said.
Walde takes a pan-European approach to his job. "The Goethe Institute can be a vehicle for dialogue in Lithuania and approach new spaces for communication, as well as provide a new window to the world in Vilnius," he said.
Walde said that it is more important for the institute to serve as a means for Lithuanians to foster their sense of European identity than simply to serve as a place for "polishing" German culture. He is behind a highly successful series of panel discussions called "The Future of Memory" that have brought together important academics from Germany, Poland and Lithuania.
The discussions focus on aspects of identity and cultural life in the three countries. The three countries share at times painful historical links.
Walde felt that a dialogue on these subjects between the three states was not taking place, especially in Vilnius, and therefore set up the discussions. They are all free and open to the public.
Also, the institute organizes exhibitions and cultural exchanges in the visual arts, dance, theater and music. "The dimension of intellectual and artistic discussion is important for building a new Europe. Many times a person will more easily identify a country by an artist like Cervantes and Picasso (in the case of Spain), and will have trouble naming the country's prime minister or president. These are the shared values of cultural expression and the cement of a society," said Walde.
Walde holds a Ph.D. in philosophy and spent four years as the Goethe Institute's director in Karachi, Pakistan before coming to Vilnius.
The Goethe Institute is named after Johann Wolfgang von Goethe (1749-1832), who is generally regarded as Germany's greatest poet laureate and famous for his poetic drama, Faust, in which he wrote: "Two souls dwell, alas! in my breast."