But Merkel, Europe's most powerful leader, made clear that this was not at the top of her agenda as she reaffirmed Berlin's strong ties with France and its newly elected President Emmanuel Macron.
"For me the shaping of the future of the 27 is a priority coming before the issue of the negotiations with Britain on the exit," Merkel said.
"We want to conduct these negotiations in a good spirit but the clear focus has to be on the future of the 27."
Macron, attending his first summit, did not mention Brexit directly but said it was now time to get down to concrete work -- "hand in hand with Germany" -- on putting the European Union back on track after years of austerity and crisis.
Britain's vote to leave the EU exactly a year ago on Friday was the biggest in a series of shocks that the bloc has faced, but it now insists it is turning the corner on anti-EU sentiment.
May is set to brief EU leaders on her Brexit plans over dinner on Thursday, before being kicked out while the remaining 27 discuss key issues including the future location of the EU's medicines and banking agencies, currently based in Britain.
For her part, May said she would set out "clearly how the UK proposes to protect the rights of EU citizens in the UK and see the rights of UK citizens living in Europe protected."
The fate of an estimated three million Europeans living in Britain and around one million Britons living elsewhere in the EU was thrown into doubt by Britain's vote to leave the bloc last year.
"That's been an important issue, we've wanted it to be one of the early issues that was considered in the negotiations, that is now the case, that work is starting," she told reporters as she arrived.
May had previously refused to guarantee the rights of EU citizens in Britain until those of expatriate Britons were secured.
A European diplomat said that there was "no question of any discussion, let alone any negotiation" with May at the summit.
The issue of citizens' rights is one of three priorities in the Brexit talks which began on Monday, along with Britain's estimated 100 billion euro (88 billion pounds, $112 billion) divorce bill, and the fraught question of Northern Ireland, which will share Britain's only land border with the EU after Brexit.
Earlier, EU president Donald Tusk had channelled former Beatle John Lennon as he said he hoped Brexit could be reversed -- though others immediately poured cold water on the idea.
"I told them that in fact the European Union was built on dreams that seemed impossible to achieve, so who knows?" the former Polish premier said.
"You may say I am a dreamer, but I am not the only one," he added with a broad smile, quoting Lennon's iconic song "Imagine."
But Belgian Prime Minister Charles Michel -- who has strongly argued for EU unity on Brexit -- said Tusk should let it be.
"It's time for action and certainty. Not for dreams and uncertainty #Brexit #Future of Europe," Michel tweeted.
Calling Brexit "a pity", Lithuania's outspoken President Dalia Grybauskaite said: "We need to think about the future, and the sooner we settle the future the better for all of us."
At the same time, Tusk insisted that the remaining 27 members had a renewed sense of optimism about the bloc's future after years of crisis and mounting anti-EU sentiment, which culminated in the Brexit vote.
"Never before have I had such a strong belief that things are going in a better direction," he said.
Can May Deliver?
In Brussels, security has been stepped up after Tuesday's bombing at one of the city's main rail stations by an Islamic State sympathiser, following attacks in Britain and France.
That put the immediate focus on security and the EU's growing efforts to build up a security role and capability for itself.
Meanwhile Macron and Merkel are expected to recommend another six-month rollover of tough economic sanctions imposed against Russia in 2014 over the conflict in eastern Ukraine, which has claimed 10,000 lives.
Tusk and European Commission head Jean-Claude Juncker are also expected to report on recent meetings with US President Donald Trump, who has alarmed the EU and NATO with his "America First" approach.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)