Angela Merkel's designated successor Annegret Kramp-Karrenbauer said she would quit her role as head of Germany's Christian Democratic Union (CDU) following a regional election debacle.
Kramp-Karrenbauer, known by her initials AKK, said at a press conference that the decision came after long consideration and that she did not want to be chancellor.
The party recently came under heavy criticism after electing a governor in the eastern state of Thuringia with the help of the far-right Alternative for Germany (AfD) party.
Kramp-Karrenbauer had come under pressure in recent days over her inability to get the local CDU branch to follow Berlin's guidance not to cooperate with the far-right party, exposing deep divisions within the party.
A national outcry followed the election, prompting the new governor, Thomas Kemmerich, to step down just one day after taking office. Merkel also condemned the result.
Although Kemmerich said he would not form a coalition with the AfD, many were concerned about the far-right party's leader in the eastern state, Björn Höcke, a controversial figure who has criticised German policy on the Holocaust.
Kramp-Karrenbauer said at a press conference she will stay on in that role and will continue to be party leader until a congress can decide on the candidate for chancellor.
Merkel said she regretted the decision but could only imagine that it was not an easy one.
But the change comes at a difficult time for the CDU as elections approach in 2021 and current chancellor Merkel has said she will not seek re-election.
The open question of who will be candidate for chancellor weakens Germany, Kramp-Karrenbauer said, emphasising that the party should remain strong. In her view, any rapprochement with the AfD would weaken the party as well.
The national governing coalition will remain in place, the parties have said, although the social democrats have said that Kramp-Karrenbauer's tactics gave right-wing forces the space to create a crisis.