The observed magnetoresistance of single crystalline Gd5Si2Ge2 is negative and strongly anisotropic. The absolute values measured along the [100] and [010] directions exceed those parallel to the [001] direction by more than 60%. First principles calculations demonstrate that a structural modification is responsible for the anisotropy of the magnetoresistance, and that the latter is due to a significant reduction of electronic velocity in the [100] direction and the anisotropy of electrical conductivity.