The conservatives' improbable come-from-behind triumph in heavily industrial North Rhine-Westphalia, long a bastion for the Social Democratic party and home to almost a quarter of Germany's voters, gave the chancellor a powerful gust of tailwind just four months before the federal election on September 24.
The state leader of the SDP in North Rhine-Westphalia, Hannelore Kraft, resigned immediately in a bid to deflect the loss away from Schulz. And it puts conservative challenger Armin Laschet, a liberal-minded deputy leader of Mrs Merkel's party, in a position to replace her.
"I haven't forgotten I am only here as a candidate but I saw a lot of common ground with the chancellor, as well as a lot with President (Frank-Walter) Steinmeier", he had told reporters outside her chancellery after whirlwind talks during his one-day visit. "I take personal responsibility for this defeat.", she said. "At the end, when we look to the judge, it's going to be the voters who raise the winner's arms", he said.
FILE - In this May 10, 2017 file photo German Chancellor Angela Merkel attends a weekly cabinet meeting of the German government at the chancellery in Berlin.
State polls have been seen as voter mood tests ahead of Germany's parliamentary elections in September.
Merkel's CDU increased its vote share in North Rhine-Westphalia by 6.7 per cent, and the SPD had its share trimmed by 7.9 per cent.
Effect from the election of a new Social Democrat leader, former EU Parliament President Martin Schulz, appears to be on the wane after it boosted the party's rating earlier this year.
For Merkel, it's a vindication of her two-prong approach in North Rhine Westphalia.
CDU won 34.3 percent of the votes against the Social Democrats' (SPD) 30.6 percent. The party - whose national leader, Christian Lindner, led its election effort in North Rhine-Westphalia - has tended to ally with Merkel's conservatives over recent decades.
The far-right Alternative for Germany, which did not exist in 2012, received 7.4 percent of the votes. The opposition Left Party fell just short of the 5% needed to win seats.
Following the result, Mr Laschet will discuss forming a coalition with the Free Democrats, which picked up 12.6% of the vote.
The other likely option is for a "grand coalition" with the SPD that would mirror Merkel's national government, with the SPD as the junior partner. Her closest opponent, Martin Schultz who surged in polls beating Chancellor Merkel in earlier this year is set to get crushed according to the latest poll.
"The issue of fairness is, of course, very important but I am convinced that the Social Democrats are struggling with the concept of innovation and are getting things the wrong way round", she said.