Merkel's predecessor, Gerhard Schroeder, stepped down as leader of his party in February 2004 but remained chancellor until November of the following year.
The election for the state parliament in Hesse - home of Frankfurt, the heart of German finance - gave Merkel's centre-right Christian Democratic Union (CDU) 27 per cent of the vote, according to projections based on partial returns.
The move is not unprecedented in German politics.
Electoral momentum is on the side of newer parties, more tightly focused on a narrow range of issues.
While the CDU remained the largest party in the election, which was held in the central state of Hesse, results were down 10% from the previous election.
Hesse's election was closely watched by analysts for signs of further dropping support for the CDU and SPD.
While migration and asylum policy has been sharply tightened since, it has not been enough to stop desertions to the AfD and disquiet in the CDU's own ranks.
With political weakness at home, Merkel's ability to lead within the European Union will be increasingly limited as German voters lose confidence in the coalition government, further sending the European Union into political disarray as the European bloc now wrangles Brexit with the United Kingdom and a spiralling budget crisis with the Italian government, as well as the continued rise of extremist far-right political grassroots campaigns that have been springing up throughout Europe.
Nor did the veteran leader's fourth government get off to a good start after its formation earlier this year, with two rows over relatively minor points bringing it to the brink of collapse over the summer.
The CDU has ruled Hesse for the last 19 years and just won the election at the weekend.
Meanwhile, the Greens - already the junior government partner in Hesse - look poised to nearly double their 2013 vote share to around 20 percent, topping the 17.5 percent they scored in conservative Bavaria.
The party attracts voters who favour welcoming refugees, worry about climate change or are fed up with the indulging of auto companies during a years-long scandal over harmful emissions from diesel vehicles. "So the party grandees will clench their teeth, stay in the coalition and wait for a better day".
Increasing numbers of SPD members are calling for the party to quit government immediately and lick its wounds in opposition, as it is presently polling below AfD nationwide, at 15 percent to the far-right's 16 percent. Mass-circulation daily Bild reported, citing sources in the CDU leadership, that Merkel said she wouldn't run again for the party leadership.
But a bad outcome for either Merkel's Christian Democratic Union (CDU), the SPD or both will uncork a fresh round of finger-pointing and calls to abandon the veteran chancellor's third loveless "grand coalition".
Her decision comes after her party suffered heavy losses in regional elections that threatened the stability of the governing coalition.