The 100-metre-square (1,000-square-foot) image of the half-naked world leader is part of a nationwide advertising campaign for an underwear company aiming to cash in on the success of a "cash-for-clunkers" scheme for old cars.
Punters trading in their old underwear will get a five-euro (seven-dollar) discount on a new pair, the advert promises, under the slogan: "The country needs new undies."
The electronic advert - on a busy road junction in the heart of former West Berlin - was certainly causing a stir on the streets, with scores of people taking snapshots of the billboard with cameras or mobile phones.
"I think it's great. Brilliant. It's a positive signal for the economic situation in Germany," said a 54-year-old who gave his name of Meier adding he would "definitely" trade in his old pants at the first opportunity.
Lined up behind Merkel in the advert are other members of Germany's political elite, also in their underwear, including Foreign Minister Frank-Walter Steinmeier, who aims to unseat Merkel in upcoming elections.
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