"It was a very good game from my team," said the 53-year-old Prandelli, who took over from Marcello Lippi as coach after Italy's first-round exit form last year's World Cup.
"That was the best performance since I took charge.We played against one of the best teams in the world and did well.We tried from the outset to put them under pressure and to score an early goal. We are still not on the same level as the German eleven, but we are reducing the distance between the two sides."
The last time Germany beat Italy was a 2-0 win in Zurich in June 1995, with the Azzurri winning all four games between the two sides since.
This latest encounter finished all square after Italy's 24-year-old Giuseppe Rossi cancelled out Miroslav Klose's first-half goal.
The home side have a poor record in matches between the two nations with Italy enjoying 14 wins compared to Germany's seven victories with now nine games drawn.
Having set out to beat Italy for the first time in nearly 16 years, Germany controlled the game for long periods, but failed to score the second goal which would have sealed victory.
Bayern Munich's Klose scored his 59th goal on his 106th appearance to draw closer to Gerd Mueller's all-time Germany record of 68 goals.
He put the hosts ahead after only 16 minutes following some superb play by Real Madrid's Mesut Ozil and Bayern's Thomas Mueller as Germany continued their World Cup form having reached the semi-finals in South Africa.
"That was an entertaining international from both teams," said Germany coach Joachim Loew.
"We could not maintain the tempo over the 90 minutes, as we had planned.In the second-half, we missed chances to make it 2-0.We can improve our reactions, but the goal was top-class, it came from a really good attack."
Germany hosted Italy at Dortmund's same Signal Iduna Park stadium where the Italians knocked the hosts out of the 2006 World Cup on their way to winning the title, but there was to be no pay-back for the home side.
"It was a pity that we couldn't get another goal," said Germany's vice-captain Bastian Schweinsteiger.
"It was very difficult on the pitch, we are a team who try and dominate the game through our technical ability. It didn't work out, but I trust in the fact that we will be able to beat Italy once again in the future."
Prandelli hails Azzurri's 'best performance'
Advertisement