The centre-right politician became Chancellor of Germans 15 years ago in 2005. During the pandemic Germany has recorded 1.35m coronavirus cases and 33,230 fatalities.
Ms Merkel typically delivers an annual televised address to the German people to mark the new year.
She commented: “In nine months, a parliamentary election will take place and I won’t be running again.
“Today is therefore, in all likelihood, the last time I am able to deliver a New Year’s address to you.
“I think I am not exaggerating when I say never in the last 15 years have we found the past year so heavy.
“And never have we, despite all the worries and some scepticism, looked forward to the new one with so much hope.”
Federal elections are due to take place across Germany on September 26.
Ms Merkel has already announced she will not be standing for re-election.
Currently she is the second longest serving German Chancellor since the Second World War.
Only Helmut Kohl, who oversaw German unification in 1990, has held the position for longer during this period.
Ursula von der Leyen, a close Merkel ally and her former defence minister, is now president of the European Commission.
In this capacity she took part in direct Brexit negotiations with Boris Johnson as Thursday’s deadline approached.
Both Ms Merkel and French president Emmanuel Macron refused to discuss the subject with Mr Johnson personally to maintain a united European front.
A new Brexit trade deal, to replace the transition period, was announced on Christmas Eve.
It was rushed through Parliament in just one day on December 30.
Under the agreement Britain will retain tariff free access to the EU’s internal market.
Unlike during the transition period, the UK will no longer be required to pay into the EU budget or implement rules made in Brussels.
It will also be free from the jurisdiction of the European Court of Justice.
However Northern Ireland will remain in the European single market, with some customs checks on trade between the province and the rest of Britain.
If no new trade deal had been agreed Britain and the EU would now be trading on World Trade Organisation terms, meaning tariffs on many products.
On Wednesday Mr Johnson signed the Brexit trade deal at a ceremony in London.
He tweeted: “By signing this deal, we fulfil the sovereign wish of the British people to live under their own laws, made by their own elected Parliament.”