Lawmakers voted by 364 to 315, with nine abstentions, in favour of re-electing Merkel, a humbling start as the coalition of her conservatives and the centre-left Social Democrats (SPD) has 399 votes in the Bundestag lower house of parliament.
"I accept the vote," a beaming Merkel, 63, told lawmakers.
In office since 2005, she has dominated Germany's political landscape and steered the European Union through economic crisis.
But her authority was dented by her decision in 2015 to commit Germany to an open-door policy on migration, resulting in an influx of more than one million people.
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