News agency dpa cited unidentified party sources who said that she is prepared to step down as party leader but remain as chancellor for now.
Germany's Angela Merkel will not run for re-election as leader of her centre-right CDU, sources said Monday, in the clearest sign yet that the veteran chancellor is preparing her eventual exit after voters again punished her fragile coalition in a regional poll.
"I won't seek any further political offices", she added.
Merkel's decision does not mean she will cease to be Germany's leader in December.
In October, she addressed the idea of a post-Merkel era, saying that attempts by Germany's outgoing leaders to anoint a successor "have always completely failed, and it's probably better that way".
Stepping down as CDU chairwoman further undermines Merkel's authority, which has been dented this year by the two regional election setbacks and a close ally losing his role as leader of her conservatives' parliamentary group.
The Social Democrats only reluctantly entered Merkel's fourth-term national government in March, and many are dismayed by what has happened since.
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"The election results show that people expect renewal from the CDU", conservative lawmaker Matern von Marschall told the Stuttgarter newspaper.
The debacle followed a battering in a state election in Bavaria two weeks ago for the CSU and the Social Democrats.
After 13 years with Merkel at the helm, majority in coalition with the SPD, many Germans are exhausted of government by carefully-crafted compromise, calling instead for clear direction on pressing policy issues like migration, security, reform of the European Union and climate change.
While the CDU remained the largest party in the election, which was held in the central state of Hesse, results were down 10% from the previous election.
While she may have gained the accolade of Time Person of the Year in 2015 for allowing over 1 million refugees into the country, not all voters have hailed this as a success.
The Social Democrats' leader, Andrea Nahles, demanded Sunday a "clear, binding timetable" for implementing government projects before the coalition faces an already-agreed midterm review next fall. That decision has led to lasting tensions in her conservative Union bloc, particularly with the CDU's Bavaria-only sister party, the CSU, and helped the anti-immigrant Alternative for Germany party gain support.