Angela Merkel's Christian Democratic Union may have come out on top in the Hesse state election on Sunday but the result - the party's lowest in over 50 years - is a major electoral blow that could precipitate the German Chancellor's departure.
"Today it is time to begin a new chapter", she told reporters at her party headquarters.
Party sources said Merkel's favoured successor, CDU party secretary general Annegret Kramp-Karrenbauer, Friedrich Merz, a former parliamentary leader of Merkel's conservative alliance, and Health Minister Jens Spahn had announced their candidacies for the party chair.
Merkel said she took took responsibility for CDU's poor results in state elections since a year ago. "I have said over the past few days that Angela Merkel knows best what to do, and now she has decided".
She would ratherwaive the party leadership than not be reelected.
"But the news might not all be bad, as this could increase the chances Merkel seeks a top European Union job next year", he added.
She allowed in large numbers of asylum-seekers in 2015, declaring that "we will manage it", before gradually pivoting to a more restrictive approach.
The Social Democrats only reluctantly entered Merkel's fourth-term national government in March, and many are dismayed by what has happened since.More news: Victims of Pittsburgh shooting identified
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Merkel rounded up all her decisions in one sentence - that she will not stand for any political office once her mandate as chancellor expires in 2021.
Merkel has been CDU chairwoman since 2000 and while her departure from the party post would not automatically result in her stepping down as German chancellor, the move is an acknowledgment of her increasingly vulnerable position. In projections throughout the evening, the outgoing CDU-Green coalition was forecast to win 61 seats out of 121, securing a razor-thin majority.
Her current term as chancellor runs into 2021 - and Merkel said she is "prepared" to stay in the chancellor post through her current term.
"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.
Several CDU politicians have announced they want to succeed Ms Merkel as party leader.
The mass arrivals are credited with fuelling the rise of the far-right, but Merkel has resisted calls to steer the CDU further rightward in response.
Angela Merkel's party has suffered heavy losses in regional elections.
Two weeks ago, two of the federal governing parties - the Christian Social Union, the Bavaria-only sister to Merkel's CDU, and the Social Democrats - were battered in a state election in neighboring Bavaria.
The AfD party has representatives in all 16 states in Germany.