Merkel, who after 12 years in power held a double-digit lead for most of the campaign, scored around 33 percent of the vote with her conservative Christian Union (CDU/CSU) bloc, according to exit polls. The exit poll made her and her supporters very happy. Its nearest rivals, the Social Democrats and their candidate Martin Schulz, came in a distant second, with a post-war record low 20-21 percent.
Supporters gathered at the party headquarters in Berlin cried out with joy as public television reported the outcome, many joining in a chorus of the German national anthem.
But in a bombshell for the German establishment, the anti-Islam, anti-immigration Alternative for Germany (AfD) captured around 13 percent, making it the country's third biggest political force. The four-year-old nationalist party with links to the far-right French National Front and Britain's UKIP has been shunned by Germany's mainstream.
While the likelihood of the AfD winning seats was clear for months, commentators called its strong showing a “watershed moment” in the history of the German republic. It is now headed for the opposition benches of the Bundestag lower house, dramatically boosting its visibility and state financing.
Alarmed by the prospect of what Foreign Minister Sigmar Gabriel branded “real Nazis” entering the Bundestag for the first time since World War II, the candidates had used their final days of campaigning to implore voters to reject the populists.
Germans elected a splintered parliament reflecting an electorate torn between a high degree of satisfaction with Merkel and a desire for change after more than a decade of her leadership.
Another three parties cleared the five-percent hurdle to be represented in parliament: the liberal Free Democrats at around 10 percent and the anti-capitalist Left and ecologist Greens, both at about nine percent.
As Merkel failed to secure a ruling majority on her own and with the dejected SPD ruling out another right-left “grand coalition” with her, the process of coalition building was shaping up to be a thorny, potentially months-long process.
Merkel, 63, whose campaign events were regularly disrupted by jeering AfD supporters, said in her final stump speech in the southern city of Munich that “the future of Germany will definitely not be built with whistles and hollers”.
Merkel, often called the most powerful woman on the global stage, ran on her record as a steady pair of hands in a turbulent world, warning voters not to indulge in “experiments”. Merkel's reassuring message of stability and prosperity resonated in greying Germany, where more than half of the 61 million voters are aged 52 or older. Her popularity had largely recovered from the influx since 2015 of more than one million mostly Muslim migrants and refugees, half of them from war-torn Syria, Iraq and Afghanistan.
But the AfD was able to capitalise on a wellspring of anger over the asylum issue during what was criticised as a largely lacklustre campaign bereft of real clashes among the main contenders.
The party has made breaking taboos its trademark. Gauland has called for Germans to shed their guilt over two world wars and the Holocaust and to take pride in their veterans. He has also suggested that Germany's integration commissioner Aydan Ozoguz, who has Turkish roots, should be “disposed of in Anatolia”.
Law student Sabine Maier dismissed the AfD as “too extreme” as she voted in Berlin. But she also criticised the media for lavishly covering the most outrageous comments by the upstart party. “They aren't all fascists,” she said.
The SPD said its catastrophic result would lead it to seek a stint in opposition to rekindle its fighting spirit. “This is a difficult and bitter day for German social democracy,” a grim-faced Schulz, a former European Parliament chief, told reporters, adding that he hoped to remain party leader.
This would leave Merkel in need of new coalition partners — possibly the pro-business Free Democrats, who staged a comeback after crashing out of parliament four years ago. In theory they could join forces with the left-leaning Greens, who, however, starkly differ from the FDP on issues from climate change to migration policy.
Schulz, 61, struggled to gain traction with his calls for a more socially just Germany at a time when the economy is humming and employment is at a record low. The SPD also found it hard to shine after four years as the junior partner in Merkel's left-right “grand coalition”, marked by broad agreement on major issues, from foreign policy to migration. In the final stretch, the more outspoken Schulz told voters to reject Merkel's “sleeping-pill politics” and vote against “another four years of stagnation and lethargy”.
Angela Merkel has been derided as Europe's “austerity queen”, cheered as a saviour by refugees and hailed as the new “leader of the free world”. But as the pastor's daughter raised behind the Iron Curtain just won a fourth term at the helm of Europe's biggest economy, many Germans simply call her the “eternal chancellor”.
Merkel was born Angela Dorothea Kasner in 1954 in the port city of Hamburg. Weeks later her father, a leftist Lutheran clergyman, moved the family to a small town in the communist East at a time when most people were headed the other way.
Biographers say life in a police state taught Merkel to hide her true thoughts behind a poker face. Like most students, she joined the state's socialist youth movement but rejected an offer to inform for the Stasi secret police while also staying clear of risky pro-democracy activism.
A top student, she excelled in Russian, which would later help her keep up the dialogue with President Vladimir Putin, who was a KGB officer in Dresden when the Berlin Wall fell in 1989.
During that momentous upheaval, Merkel joined the nascent Democratic Awakening group, which later merged with the Christian Democrats (CDU) of then-chancellor Helmut Kohl, who fondly if patronisingly dubbed Merkel his “girl”. But Merkel's mentor was not the last politician to underestimate her and pay the price. When Kohl became embroiled in a campaign finance scandal in 1999, Merkel openly urged her party to drop the self-declared “old warhorse”.
The move, which has been described as “Merkelvellian”, kicked off her meteoric rise. As an outsider, she remade the CDU, anchoring it in the political centre by pushing progressive social policies, abolishing compulsory military service and scrapping nuclear power. She emerged as Europe's go-to leader during the debt crisis, though she was derided as a puritanical “austerity queen” in the worst-hit southern countries.
As she starts her fourth term, there is no challenger in sight, but plenty of challenges ahead for Merkel, whom New Yorker magazine just labeled “the most powerful woman in a world filled with unstable men”.
Brexit and consolidation of EU, Turkey’s legitimate EU membership are some of the issues she is likely to concentrate on in the near future.