With 32.5% of the votes, her conservative CDU/CSU alliance will remain the largest party in the parliament.
The numbers are the worst results for the alliance between the Christian Democrat (CDU) and the Christian Social Union (CSU) under Merkel’s leadership.
But Mrs Merkel who has been very optimistic throughout the process has told supporters she had hoped for a “better result”.
“The CDU would have hoped for better result, but we mustn’t forget – looking back at an extraordinary challenge – that we nevertheless achieved our strategic objectives: we are the strongest party. We have mandate to form the new government and we will form the new government.
“We have had 12 years of governmental responsibility and it was not a foregone conclusion that we would be largest party again. But this was also an election that saw the arrival in parliament of the AfD.
“We will conduct a very thorough analysis; we want to regain those voters who voted for the AfD, to discover their concerns and worries … We want to win back the AfD voters above all through good politics.”
Whilst its outgoing partner the social democratic SPD secured 20% of the votes, the nationalist AfD surprisedly secured 13.5% to become the third largest party.