Mrs Merkel sounded the alarm on Tuesday after announcing tough new restrictions including a lockdown over the Easter holiday.
The strict curbs are intended to drive down the rate of infections in Germany, where the daily number of cases per capita has passed that of the United States.
“We basically have a new pandemic,” Mrs Merkel told reporters in Berlin in the early hours.
“Essentially we have a new virus, obviously of the same type but with completely different characteristics,” she added.
“Significantly more deadly, significantly more infectious (and) infectious for longer.”
The weekly infection rate per 100,000 people stood at 107 nationwide on Monday, up from the mid-60s three weeks ago.
Officials agreed to largely shut down public life from April 1-3, adding a public holiday and shutting down most stores for the period. Public gatherings will be banned from April 1-5, to encourage people to stay at home.
Existing coronavirus restrictions previously set to run until March 28 will now remain in place until April 18.
Amid concern over the rise in Germans traveling abroad on holidays, authorities also agreed on a blanket requirement for air travellers to be tested for Covid-19 before boarding a flight to Germany.
Mrs Merkel said Germany, which had comparatively low deaths during the first phase of the pandemic last spring, has seen “successes but also of setbacks” and insisted the situation would improve as more people get vaccinated.
Germany’s vaccination campaign has so far lagged behind expectations, with only about 9% of the population receiving at least a first jab and 4% receiving both doses by Sunday.
“It’s difficult for longer than we thought,” said Mrs Merkel, “but there’s definitely light visible at the end of the tunnel.”
Asked about the EU’s plans to restrict the export of vaccines and components, Mrs Merkel said she supported efforts by the bloc’s executive Commission to ensure contracts are fulfilled, citing the supply problems the EU has had with the AstraZeneca vaccine.
Mrs Merkel said she and French President Emmanuel Macron had each spoken to Britain’s Prime Minister Boris Johnson about the issue in recent days and EU leaders would aim to reach a decision “in a responsible way” at a virtual summit on Thursday.