Mrs Merkel's Christian Democrats held on to power in Baden-Wuerttemberg and Saxony-Anhalt while the Social Democrats maintained their dominance in Rhineland-Palatinate.
About one-fifth of the national electorate was called to the polls on the rare "Super Sunday" of elections.
The outcome allowed both the conservatives and the Social Democrats to walk away celebrating, and maintain their delicate balance of power under Mrs Merkel.
"It was a victory for Angela Merkel and the grand coalition in Berlin," said the conservatives' parliamentary group leader, Volker Kauder.
In the southwestern state of Baden-Wuerttemberg, the prosperous home of auto giants DaimlerChrysler and Porsche, the conservatives captured about 44 percent of the vote.
The Christian Democrats have ruled the state for half a century and will probably continue their coalition with the liberal Free Democrats.
Voters in the depressed eastern state of Saxony-Anhalt gave the Christian Democrats between 36 and 38 percent of the vote and put the Social Democrats in third place behind the Left Party with about 24 percent.
The conservatives' partners in the state, the Free Democrats, failed to muster a score that would allow them to continue the alliance, increasing the likelihood of a link-up with the Social Democrats, who garnered about 21 percent.
A "grand coalition" in Saxony-Anhalt would broaden the Merkel coalition's majority in the Bundesrat upper house, helping it in an upcoming battle over a sweeping overhaul of Germany's federal system.
Key reforms
Meanwhile the Social Democrats scored a historic victory in wine-producing Rhineland-Palatinate thanks to the popularity of premier Kurt Beck, one of their leading figures at the national level.
They drew about 45 percent of the vote, possibly enough for an absolute majority and far ahead of the Christian Democrats, who suffered a crushing defeat with about 33 percent of the vote.
Analysts noted before the polls that Mrs Merkel's Christian Democrats had little interest in a disaster for the Social Democrats in Sunday's polls, which could have undermined the already unwieldy alliance in Berlin and cause the SPD to lurch to the left on key issues.
The two parties, traditional rivals, largely steered clear of all-out attacks during the campaigns to avoid jeopardising their coalition in Berlin.
The chancellor, who has enjoyed an extended political honeymoon since ousting Gerhard Schroeder and is now Germany's most popular politician, said this month she would tackle key reform initiatives after these elections.
They include efforts to shore up the creaking health-care system, the possible introduction of a minimum wage and plans to strip away laws protecting employees against sacking, all potentially divisive tests of the ruling coalition.