Angela Merkel has won, for the fourth time, but on her party's worst election result since 1949.
Many pollsters expected the party will enter the German parliament Bundestag by bagging six percent. but it made advances after Cologne attack. In what Der Spiegel describes as a "significant shift" for German politics, the anti-immigration, nationalist Alternative for Germany (AfD) surprised political analysts by winning 13.1 percent of the votes, according to the projected results.
Global and domestic Jewish groups on Sunday expressed alarm at the far-right Alternative for Germany's success in Germany's parliamentary election, with the European Jewish Congress urging other parties not to form an alliance with the AfD. With the Social Democrats ruling out a coalition with Merkel's party, she now has the tough challenge of trying to join forces with the Free Democrats and the Greens.
"Nobody wants to say this is like a National Socialist Party", he said of the AfD's Euroskeptic and anti-Islam views, "but we haven't seen such views since 1945 and we all thought they would be over". "It is completely clear that the role the voters have given us is as the opposition", Mr Schulz said.
Now, she faces an unstable situation at home as she must form a coalition, an arduous process that could take months.
"There can not be a coalition government built against us", she said, adding she was sure there would be a stable government by Christmas.
Merkel's victory comes against the backdrop of criticism about her 2015 decision to allow more than a million refugees, mostly people escaping war in the Middle East, into Germany.
The pro-business Free Democrats (FDP) bounced back into parliament with 10.1 percent of the vote, while the environmental Greens scored 9.2 percent and the leftist Die Linke picked up 8.9 percent.
Mr Schulz later blamed Merkel for the far-right surge, saying that she had run a "scandalous election campaign" devoid of meaningful debate and that the AfD had filled the vacuum.
"We have to take the concerns of AfD voters very seriously", said David McAllister, a CDU member and chair of the European Parliament Foreign Affairs Committee. SPD leader Martin Schultz, Merkel's main rival, stated that he will not sit in a coalition with the German Chancellor.
The Social Democrats were adamant on Sunday night that they would not continue to serve under Mrs Merkel.