Merkel's Christian Democrats losses regional vote to anti-Islam and anti-migrant party in Mecklenburg-Vorpommern as a result of Merkel's controversial immigration policy.
Germany's anti-migrant populists made a strong showing at Sunday's state polls, defeating German Chancellor Angela Merkel's ruling party, partial results said.
In a stinging defeat for Merkel's Christian Democrats (CDU) in her home district, the centre-left Social Democrat Party (SPD) got 30.5% of the votes and the xenophobic anti-migrant Alternative for Germany (AfD) taking second place with 21.9% of the votes.
The CDU ended the election in third place in the region of Mecklenburg-Vorpommern where Merkel has her political base, taking just 19% of the votes.
The regional election is considered a rehearsal for next year's general election when Merkel's decision, exactly a year ago, to let in tens of thousands of migrants is expected to be a key point of contention.
Merkel's liberal migrant policy has dissatisfied many German people, exposing her to heavy criticism at home, including from her own conservative allies.
German officials have said that more than 1 million migrants have entered the country, not only from Syria but also from other worn-torn countries in the Middle-East and Africa.
"The only issue voters care about right now is (Merkel's) irresponsible migrant policies," said Leif-Erik Holm, the leader of the AfD in Mecklenburg-Vorpommern.
"It's not what people want. I think this is the beginning of the end of Merkel," Holm added.
According to a Der Spiegel magazine report, Merkel postponed an announcement about her candidacy for the 2017 election due to resistance from her Bavarian sister party, the Christian Social Union.
The CSU has demanded that Merkel put limits on the numbers of refugees.
"We need a limit on refugees and quicker deportations," said Andreas Scheuer, deputy leader of the CSU, told Der Tagesspiegel daily.
Thomas Jaeger, a political scientist at Cologne University, told Reuters that Merkel will not be out of the game.
"This was a dark day for Merkel," said Jaeger. "Everyone knows that she lost this election. Her district in parliament is there, she campaigned there, and refugees are her issue."
Voters already punished Merkel in three state elections in March, voting in droves for the AfD and rejecting Merkel's Christian Democrats.
Ahead of Sunday's vote, Merkel had urged the population to reject the populists.
"The more the people who go to vote, the less the percentage won by some parties that, in my view, have no solution for problems and which are built mainly around a protest, often with hate," she said.
Founded in 2013, the AfD now has won seats in nine of the 16 state assemblies across the country. However, it has no chance of governing in Mecklenburg-Vorpommern since the other parties have said they would not form a coalition with the party.