Gottschalk, who was born in Calau, Brandenburg, Germany, married a Jewish woman, Meta Wolff, shortly before Hitler came to power, and they had a half-Jewish son, Michael. The Gottschalks managed to avoid the anti-Jewish Nuremberg laws and rising tide of anti-semitic violence in Nazi Germany because of "Joschy" Gottschalk's immense popularity with the public, but Gottschalk made the mistake of taking his Jewish wife to a social function and introduced her to some of the prominent Nazis who were present.
The Nazi propaganda chief Joseph Goebbels (a virulent anti-Semite) learned about this incident, and decreed that Gottschalk would be required to separate from his Jewish wife. When Gottschalk refused, Goebbels ordered that Gottschalk's wife and child would be transported to the Theresienstadt concentration camp. Gottschalk wanted to accompany Meta and Michael to Theresienstadt, but Goebbels ordered that Gottschalk would instead be inducted into the German Army, the Wehrmacht.
In November 1941, minutes before the expected arrival of the Gestapo, Gottschalk and his wife committed suicide by gas poisoning after sedating their son, who died with them. They are buried at the Stahnsdorf Friedhof on the south-western edge of Berlin.
Goebbels ordered that no further mention would be made of Gottschalk in the German newspapers, but word got out anyway and millions of German women mourned his death. Because of Nazi censorship, most of his devoted fans did not learn the awful circumstances of his death until after the war.
This incident poisoned the already-tense relationship between Goebbels and the German film community, which already referred to the Reich Propaganda Minister (behind his back) as "Mickey Mouse" because of his pinched face and huge ears.
In a bizarre parallel, Goebbels and his wife committed suicide a few years later in Hitler's Berlin bunker and poisoned all six of their young children. In Goebbels' case, the motive for his suicide was fear of being captured by the advancing Soviet Army, which was less than a mile away. Goebbels had played a major role in the Holocaust, including the production of a series of anti-Semitic films, and he knew he would have been put on trial and executed for crimes against humanity, had he lived.