News of Merkel's potential exposure to the virus came minutes after she announced a ban on public gatherings of more than two people and further infection control measures.
"The Chancellor has decided to quarantine herself immediately at home. She will be tested regularly in the coming days... (and) fulfil her official business from home," spokesman Steffen Seibert said in a statement.
Merkel had been slated to lead a cabinet meeting Monday to sign off on a 822-billion-euro ($882 billion) slew of measures to support Europe's top economy through the shutdowns of public life designed to slow the infection's spread.
The infected doctor visited Merkel on Friday to vaccinate her against the pneumococcus bacteria.
It could take some days to determine whether the 65-year-old chancellor is herself infected as "a test would not yet be fully conclusive," Seibert said.
Merkel showed no apparent symptoms of ill health in Sunday's televised press conference.
During her 15-year term in office the chancellor has largely enjoyed robust health, although she suffered repeated shaking spells in public appearances during a summer 2019 heatwave that were never fully explained.
In response to the tremors, she chose to sit on a chair when receiving guests with military honours outside the chancellor's office in Berlin. Previously the veteran leader broke her pelvis in a cross-country skiing accident in 2014.
It was not immediately clear whether Merkel will isolate herself in a rarely-used official residence in the top floor of the chancellery building or at her personal flat in Berlin's museum district.
Wearing one of her trademark block-colour blazers, she had been seen doing her own shopping at a local supermarket late Saturday, buying items including wine and toilet paper.
If conservative leader Merkel were incapacitated, her role would be filled by vice-chancellor and finance minister Olaf Scholz of her junior coalition partners, the centre-left Social Democratic Party (SPD).
Scholz last week isolated himself at home with a heavy cold, but tweeted a day later that he had tested negative for the coronavirus.
Earlier Sunday, Merkel had announced still-tighter restrictions on public gatherings after a telephone conference with regional leaders that aimed to get Germany's 16 federal states into a common policy.
The closure of schools and non-essential shops had already been announced.
Businesses like massage studios and hairdressers where people come into close contact will also be shut.
And restaurants will be closed across Germany except for takeaway food.
The measures slated to last initially for two weeks, will be imposed by individual states, which will decide when to roll them out.
Merkel appealed to citizens' "reason and empathy" in implementing the contact restrictions, saying she had been "very moved" by how closely people had stuck to less stringent measures implemented in recent days.
The Robert Koch Institute, Germany's disease control authority, said early Sunday the number of confirmed coronavirus cases had grown by almost 2,000 in the previous 24 hours, to 18,610.
So far 55 Germans have died of the disease.
Germany's all-out support to the economy on the cabinet agenda Monday includes hundreds of billions of euros in potential support for companies and workers.
Much of it will come in the form of state guarantees for bank loans to business and easier access to short-time working and unemployment benefits.
But Berlin also plans to blow through a constitutional rule that limits the size of the federal budget deficit in any one year, with around 156 billion euros in new borrowing.
Ending the crisis "comes first", Merkel has said, adding "we will see at the end of that where our budget stands".
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.