Nowadays they are mostly used interchangeably: "Der Brief ist in/auf Deutsch geschrieben."
But you'd use "auf" in a sentence like this:
Was heißt "carpet" auf Deutsch? - Teppich. (What's "carpet" in German? - Teppich.)
And you'd always have to use "in" when you're talking about the school subject:
In Deutsch habe ich immer gute Noten. (I always get good grades in German)