Wednesday's election has become a litmus test of Merkel's authority as her coalition stumbles lower and lower in opinion polls and her personal ratings hit rock bottom just as Europe looks for strong leadership to pull back from economic crisis.
"This is a test of whether the chancellor is able to pull her troops together," said Roland Sturm, a political scientist at the University of Erlangen-Nuremberg. "There is a sense of Doomsday being put about by the commentators in Germany."
A 1,244-strong federal assembly, made up of parliamentarians and regional delegates including actors, pop stars and sporting personalities, will vote whether to elect Merkel's conservative candidate, Lower Saxony state premier Christian Wulff, or the centre-left opposition nominee, Protestant pastor Joachim Gauck.
Even though Gauck is more popular with the public, Wulff's election should be a formality thanks to the absolute majority Merkel's centre-right coalition holds in the assembly, as well as the far left's antipathy towards the pastor.
But the media says the chancellor's position is in jeopardy because Gauck's fame as a civil rights activist in former East Germany has endeared him to many inside her camp.
The future of Vice-Chancellor Guido Westerwelle, head of the pro-business Free Democrats (FDP), may also hinge on the outcome of the secret ballot, with sections of the embattled party already in open revolt against their leader.
Gauck has consistently come out on top in polls for the largely ceremonial presidency, and a number of FDP officials from eastern Germany have already said he will get their vote.
To be elected, Gauck would likely need widespread support in the federal assembly from the Left Party, which includes the successors to East Germany's former communist rulers.
Many leaders of the Left, which accounts for one tenth of the delegates in the assembly, have spoken out against Gauck because of his attitude towards the German Democratic Republic (GDR) and the party has its own candidate for the post.
Yet if Merkel suffers enough abstentions or defections in the first or second round of voting to deny Wulff an absolute majority, it would be seen as a blow to her leadership.
If a third round is needed - when a relative majority will suffice for Wulff - the media will be merciless, said Uwe Andersen, a political scientist at the University of Bochum.
"The headlines would be about 'The Beginning of the End'," he said. "It would deepen the crisis in the coalition because then recriminations would start about who was to blame."
Rivals abroad may also be looking for signs of weakness.
"Whatever hurts the government hurts its ability to act on the international stage," said political scientist Sturm. "I'm sure France will be looking very closely at what happens." Without Merkel's troubles domestically, international media would not have injected so much drama into an event that rarely causes ripples outside Germany, he said. Whatever the outcome, she has few rivals that could replace her soon, Sturm added.
"Germans know what they don't want but not really what they do want," he said. "Gauck represents more of a projection screen for their hopes and dreams than any kind of viable alternative."
(EurActiv with Reuters.)