"We want to make the mission in Afghanistan a success," Merkel said in a speech to the Bundestag, the lower house of parliament, on the first anniversary of her swearing-in as chancellor.
"The German military is doing an important and dangerous job," she said. "But I see no military commitment beyond this mandate."
The German force of about 2,750 soldiers is based in the relatively peaceful north of Afghanistan as part of the NATO-led International Security Assistance Force (ISAF).
They are primarily involved in reconstruction projects and supply logistical support in the fight against opium production.
Increased fighting putting pressure on troops
Although the German government voted last month to extend the troop's mission for another year, the mandate limits the forces to activities around the northern cities of Kabul, Kunduz, and Faizabad, although they are permitted to be deployed to the south in the case of an emergency.
Germany has been under repeated pressure to allow its combat troops to be sent to the south of Afghanistan, where ISAF forces have had increasing casualties in recent months in the face of unexpectedly fierce resistance from Taliban fighters.
In the wake of increased fighting NATO's Supreme Allied Commander Europe James Jones repeated a call for additional troops to be sent to the region. He said Afghanistan needed a total of about 2,500 more troops, an increase of about 15 percent.
"If we're properly organized and we bring all elements of our efforts together in cohesion, we will win," he said. "If we don't, it will be longer and it will be more difficult and it will be more costly."
NATO wants more troops in the south
In a recent speech in Brussels, NATO Secretary General Jaap de Hoop Scheffer emphasized that NATO needed to be involved in "the full spectrum of operations, from combat to peacekeeping."
Germany is expected to face further pressure at next week's two-day NATO summit in Riga, Latvia.
Berlin has ruled out contributing additional forces and Merkel said re-deploying the troops now could undo what they had achieved.
"The German army is carrying out a difficult and important role in the north and we do not want to put the success of this mission in jeopardy," she said. "I don't see anyone who seriously wants to endanger the relative security that we have achieved in the north."
In a similar vein, the Social Democrats parliamentary leader and former defense minister, Peter Struck, said discussions about changing the mandate were incomprehensible.
Summit should be more than north-south debate
"Our responsibility is in the north, and that's how it will stay," he said in parliament on Wednesday.
He added that German soldiers would remain helping reconstruct Afghanistan, and added that sending combat troops into a region was "not a way to win the population's trust."
Merkel also said that NATO needed to use the summit in Riga to do more than discuss where troops need to be stationed.
"We need a new approach that intelligently unifies security and reconstruction," she said.