Germany's second biggest party, the Social Democrats (SPD), Sunday finally gave the all-clear to renew their partnership with Merkel's conservatives, ending a political impasse that had plagued the country since September's inconclusive election.
"Almost six months after the election, the people expect something to happen now," Merkel said in a brief statement.
"We see that... Europe faces challenges and that a strong voice from Germany, along with that of France and other member states, is necessary," she said, pointing to a litany of issues ranging from world trade to war in Syria that demand attention.
All that "requires us to begin work quickly in the government," she said.
After September's election that handed her a victory with no clear majority, Merkel has been struggling to find partners to govern with.
Stung by its worst post-war score, her previous coalition partner the SPD had initially refused to renew a collaboration with her, but later relented.
Both Merkel's conservatives and the center-left SPD had been weakened as voters angry about the arrival of more than a million asylum seekers in Germany since 2015 turned to the far-right Alternative for Germany (AfD).