Her government said it would shut down all 17 nuclear power plants in Germany, the world's fourth-largest economy, by 2022. It had no immediate estimate of the transition's overall cost.
The plan - which requires parliamentary approval - sets Germany apart from most other major industrialized nations. Among other Group of Eight nations, only Italy has abandoned nuclear power, which was voted down in a referendum after the 1986 Chernobyl disaster.
The decision marks a remarkable about-face for Merkel's center-right government, which only last year decided to extend the life span of Germany's nuclear reactors, with the last scheduled to go offline about 2036. But Merkel, who holds a doctorate in physics, said that industrialized, technologically advanced Japan's "helplessness" in the face of the Fukushima disaster made her rethink the technology's risks.
Phasing out nuclear power so swiftly will be a challenge, but it is feasible and ultimately will give Germany a competitive advantage in the renewable-energy era, Merkel said.
"As the first big industrialized nation, we can achieve such a transformation toward efficient and renewable energies, with all the opportunities that brings for exports, developing new technologies and jobs," Merkel said.
Germany's seven oldest reactors, already taken off the grid pending safety inspections after the March catastrophe at Japan's nuclear plant, will stay offline permanently, Merkel said. The plants accounted for about 40 percent of Germany's nuclear power capacity.
At the time of Japan's disaster, which followed a 9.0-magnitude quake and tsunami, Germany drew just under a quarter of its electricity from nuclear power - about the same share as in the United States.
