What are her coalition options?
The exit polls suggest the Social Democrats (SPD), led by Martin Schulz, also had its worst election result since 1949. He said the outcome meant the end of the "grand coalition" with Mrs Merkel's alliance.
"It's a difficult and bitter day for social democrats in Germany," Mr Schulz told supporters. "We haven't reached our objective."
With the possibility of an alliance with the SPD rejected, Mrs Merkel's options are narrow, and the process of forming a new coalition could take months.
The projections suggest that
six parties will be in the German parliament for the first time since the 1950s.
The most likely scenario is of a "Jamaica" coalition, so-called because of the colours of Jamaica's flag. It includes the black CDU/CSU, the yellow, business-friendly Free Democrats (FDP) - who are returning to parliament after a four-year hiatus - and the Greens.
It is not a marriage made in heaven, as the Greens want to phase out 20 coal-fired power plants and the FDP disagree, but it is the only formation that would guarantee enough seats in the new Bundestag, German broadcaster ZDF says.
All parties have rejected working with the AfD.
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