The head of German "anti-Islamisation" movement Pegida, Lutz Bachmann, has resigned after a photo of him apparently posing as Hitler emerged.
Mr Bachmann stepped down just as tens of thousands of people were expected to rally in the eastern city of Leipzig for the latest Pegida rally.
Prosecutors are investigating insulting comments about refugees attributed to him by German newspapers.
A Pegida spokeswoman sought to play down the Facebook photo as a "joke".
But the German government condemned the photo. Vice-Chancellor Sigmar Gabriel told Bild: "Anyone in politics who poses as Hitler is either a total idiot or a Nazi. Reasonable people do not follow idiots, and decent people don't follow Nazis."
Pegida focused on Leipzig after police banned a protest by the movement in Dresden on Monday over reports of an assassination plot against the movement's leaders.
What is Pegida?
• Founded in Dresden by Lutz Bachmann in October 2014
• Acronym for Patriotische Europaer gegen die Islamisierung des Abendlandes (Patriotic Europeans Against the Islamisation of the West)
• Umbrella group for German right wing, attracting support from mainstream conservatives to neo-Nazi factions and football hooligans
• Holds street protests against what it sees as a dangerous rise in the influence of Islam over European countries
• Claims not to be racist or xenophobic
• 19-point manifesto says the movement opposes extremism and calls for protection of Germany's Judeo-Christian culture
What is Pegida?
A spokesman for state prosecutors in Dresden, the east German city which has been the focus of Pegida rallies this winter, told Reuters news agency that preliminary proceedings had been opened over comments attributed to Mr Bachmann.
"The suspicion is of incitement to popular hatred," the spokesman said.
Bild and another newspaper said Mr Bachmann had called asylum seekers "animals" and "scumbags".
Mr Bachmann has denied he is a racist,
Kathrin Oertel, a fellow founder of the Pegida movement, confirmed the resignation of Mr Bachmann, saying it related to online comments and not the photo.
"Pegida will go on," she added.
The movement has forced its way on to the political agenda in Germany with rallies that have attracted tens of thousands of people.
Deadly attacks by Islamist militants in Paris this month have fuelled anti-Muslim feeling.
In Leipzig, Pegida supporters gathered under German flags as riot police stood by.
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