Merkel's comments, made in a speech in the Baltic Sea resort town of Zingst two months before a federal election, underline her personal determination to deepen European integration if she is re-elected for a fourth term.
Calling European Union membership one of Germany's biggest strengths, Merkel said last year's Brexit decision and elections in France and the Netherlands, in which pro-European parties defeated populist candidates, had changed her perspective.
"For many people, including myself, something changed when we saw the Britons want to leave, when we were worried about the outcome of the elections in France and the Netherlands," Merkel told voters, some of whom wore straw hats with black-red-and-gold hatbands, the colours of the German flag.
The centre-right chancellor admitted that the EU was far from perfect and that Brussels sometimes was too bureaucratic.
"But we have realized in the past few months that Europe is more than just bureaucracy and economic regulation, that Europe and living together in the European Union have something to do with war and peace, that the decades of peace after World War Two would have been completely unthinkable without the European Union," Merkel said to applause.
Many people in the past had taken the EU and its advantages for granted -- such as freedom of speech, freedom of religion and freedom to travel, said Merkel who grew up in communist East Germany.
"That's why one of our election placards is saying: If Europe is stronger, and then Germany will be stronger. This is directly related."
Merkel has said she is open to proposals of strengthening the single currency through the creation of a euro zone finance minister who would oversee a pooled budget for investments and transfers intended to help member states cushion downturns.
(Reporting by Michael Nienaber, Reuters TV; Editing by Stephen Powell)