Party delegates meeting in the southern city of Munich voted Horst Seehofer — who is also Bavarian state premier — back in to head the Christian Social Union (CSU) with 87.2 percent of the ballots.
It is his lowest score since 2008, when he took over leadership of the CSU, the powerful southern-based partner party of Merkel’s Christian Democratic Union (CDU).
When he was last re-elected two years ago he won 95.3 percent of the vote.
Seehofer on Friday criticised Merkel’s open-door policy as the chancellor stood on stage beside him at the Munich congress attended by some 1,000 CSU members.
“We want control and order, but we also want a limit — in the national interest,” said Seehofer, whose state bordering Austria has become Germany’s main gateway for people fleeing wars in Syria, Iraq, Afghanistan and elsewhere.
“I can only tell you that we will be talking about this again, and I hope that we will come to an understanding,” Seehofer said before his party faithful, as a visibly uncomfortable Merkel stood beside him, staring at the floor.
Observers said some CSU delegates wanted to punish Seehofer for his comments, though Bavarian leaders have for weeks railed against Merkel’s open-door policy.
The German news weekly Der Spiegel suggested that Seehofer’s comments did not go down well in some quarters.
“In the end his criticism somewhat turned against him because he spent minutes lecturing Merkel like a self-confident professor,” it wrote.
Visibly upset, Merkel left the CSU party congress without responding to Seehofer or the delegates.
In her speech minutes earlier at the congress, Merkel had again insisted that the top EU economy can and will shelter people in need and that “isolation and inaction are no solution in the 21st century”.
Since September more than 500,000 migrants have entered the country through Bavaria.
For Merkel, Germany’s refugee influx, predicted to reach one million people this year, has become the biggest challenge of her chancellorship as she marks 10 years in office this weekend.
Her decision to welcome Syrian refugees has won her plaudits but also sparked a backlash, with some senior ministers openly questioning the approach and her usually stellar poll ratings slipping several points.