In a phone call on Tuesday, Merkel warned the British leader that a deal on Brexit was "overwhelmingly unlikely" unless he dropped his opposition to keeping British-run Northern Ireland in the European Union's custom union.
Merkel says for a deal to be agreed upon, Northern Ireland would have to stay in the EU customs union forever, which Johnson is not prepared to agree to.
A source at Downing Street has told the BBC that a Brexit deal is "essentially impossible" after Tuesday's phone call between the PM and Angela Merkel.
The German chancellor is the latest critic of Johnson's new plan unveiled last week.
Under the British plan, Northern Ireland would stay aligned with the EU single market regulations for goods, but stay in the UK customs zone, something the EU has long opposed.
Earlier on Tuesday, the European Council president Donald Tusk, accused Johnson of not taking the negotiations seriously enough and playing "some stupid blame game."
.@BorisJohnson, what’s at stake is not winning some stupid blame game. At stake is the future of Europe and the UK as well as the security and interests of our people. You don’t want a deal, you don’t want an extension, you don’t want to revoke, quo vadis?Donald Tusk (@eucopresident) October 8, 2019
Johnson has insisted the UK will leave the EU on the Brexit deadline of 31 October, with or without a deal.
That is despite legislation passed by MPs last month, which requires the Prime minister to write to the EU requesting a further delay if no deal is signed off by Parliament by 19 October - unless MPs agree to a no-deal Brexit.
Hopes for deal still alive
The British government is due to publish a plan for a potential no-deal Brexit later on Tuesday.
Meanwhile, Merkel is meeting European Parliament President David Sassoli and President of the European Council Donald Tusk in Berlin to discuss the ongoing negotiations.
"From our side we reiterate that the EU position has not changed. We want a deal, we are working with the UK for a deal," spokeswoman Mina Andreeva told reporters.
"Technical talks are continuing today so I don't see how talks could have actually broken down if they are happening today and in the days to continue," she said.
EU leaders will meet in Brussels on Thursday and Friday next week, where Brexit will be discussed: both sides maintain they want a deal beforehand.