The current parliamentary term is due to end in 2021.
The second is Annegret Kramp-Karrenbauer, nominated by Ms. Merkel previous year to become general secretary of the CDU, a role spanning administrator and spokesperson.
That means Germany has lost some of its authority on the European stage just when the bloc faces some tough challenges including Brexit negotiations, an increasingly assertive Russian Federation and a more protectionist United States.
Merkel has dragged the CDU to the political centre in her years as leader, dropping military conscription, introducing benefits encouraging fathers to look after their young children, and abruptly accelerating the shutdown of Germany's nuclear power plants following Japan's Fukushima disaster in 2011.
Political analysts in Germany have wondered whether Merkel might not serve out a full term if she's not leading her own party - a pairing that Merkel herself has said is crucial to being an effective chancellor.
Merkel's preferred successor as leader of her conservatives, CDU Secretary General Annegret Kramp-Karrenbauer, has also warned the SPD that pulling out of the ruling coalition after the Hesse vote would trigger a federal election.
"Merkel chose not to use barbed wire, clubs, water cannon, machine guns and tanks to chase away thousands of desperate refugees on the German border", wrote her friend, the singer-songwriter Wolf Biermann.
SPD chief Andrea Nahles said on Monday her centre-left party, Germany's oldest, had failed "to break free from the government" and stand out in its right.
Having only entered politics in her thirties, she would rise to regularly be labelled the world's most powerful woman. "There was an overwhelming sense in the party that some freshness was needed". "I have said over the past few days that Angela Merkel knows best what to do, and now she has decided".
"I'm very loyal to her". She didn't specify what they might be.
Her long farewell, which came as her party suffered a marked slump in national polls and a drubbing in yesterday's state election in Hesse, heralds a period of marked instability in Europe's largest economy.
The debacle followed a battering in a state election in Bavaria two weeks ago for the CSU and the Social Democrats.
She said Monday that it's "time to start a new chapter". The head of Germany's most populous state has been an adherent of Merkel's more liberal line and would keep the party firmly in the middle and resist a shift to the right.
Merkel is expected to finish out the rest of her three year term as chancellor. Alternative for Germany politician Malte Kaufmann spoke to Sputnik about the move's implications.
"The AfD is now firmly established in the German electorate", AfD party leader Alice Weidel tweeted. Merkel is only the third chancellor of a reunified Germany.
Yesterday's election for the state parliament in Hesse - home of Frankfurt, the heart of German finance - gave Merkel's centre-right CDU 27 per cent of the vote. Merkel today described the results as "bitter" and "disappointing".
No party has haemorrhaged more support in recent years than the SPD, which has wilted as the junior partner governing in Merkel's shadow.
The Guardian points out standing down as party chair would allow a new leader to build a profile ahead of Germany's next national election in 2021.