"A third-party state will not have the same rights or even superior rights to a member state," Merkel said ahead of a Brussels summit Saturday on Brexit.
"This may sound self-evident, but I have to say this because some in Britain seem to have illusions on this point," Merkel told the German parliament (Bundestag).
She added that for Britain to think it could maintain parity would be ”wasted time” in negotiations.
She also made clear that from the beginning of negotiations, Germany would pursue Britain for its financial commitments to the EU, emphasizing that these commitments stretch beyond the time in two years when Britain is scheduled to leave the EU.
On Saturday the 27 remaining members of the EU are to meet in Brussels to draw up their position on negotiations with the UK on its exit from the union.
On Thursday Merkel reemphasized her position that talks would only begin on Britain's future relationship to the EU once the conditions of its exit had been agreed upon. This sequence of negotiations “is irreversible”, she said.
Describing the position of the remaining 27 states and the EU institutions, Merkel said there was “great agreement on our common negotiating strategy towards the UK".
“We can assume that the remaining 27 members will send out a strong signal of unanimity on Saturday,” she said.
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Volker Kauder, the head of Merkel’s Christian Democrats (CDU) in the Bundestag, backed the Chancellor in her negotiating strategy.
“It must be clear that there is a difference between whether one is in or out,” he told the broadcaster ZDF on Thursday.
Kauder warned that the negotiations would be tough, but said that “of course we will look into how relations can be set for the future."
He added that the UK would continue to be a partner to European states within Nato in the fight against terrorism.
Sahra Wagenknecht, leader of Die Linke (the Left party), warned against following a tough course in negotiations.
“The EU is going down the route of dictating the most daunting conditions possible, to deter any states which might want to follow the UK out,” she said in the Bundestag.
“If one thinks that one can only hold the EU together through intimidation, then one has already given up on Europe,” she said.
The Left Party leader argued that Berlin should pursue the interests of German industry and keep in mind that Britain is an important export market for Germany.
The EU has toughened its strategy, making new demands over financial services, immigration and the bills Britain must settle before ending its 44-year-old membership of the bloc.
The EU's latest draft negotiating guidelines, agreed on Monday, point to months of difficult talks ahead as Brussels seeks to ensure Britain does not get a better deal outside the bloc than inside.
According to the document seen by AFP, the other EU countries will seek to hold Britain liable for the bloc's costs for at least a year after it leaves in 2019 -- longer than was previously proposed.
Earlier this week, a German senior finance official pointed to some of the "tough issues" ahead, in an interview with AFP.
"What won't work is having access to the internal market without freedom of movement" for EU citizens, said Jens Spahn, state secretary at the finance ministry in Berlin.
"Or access for UK financial institutions to the European financial market if at the same time there is rampant deregulation in London.
"You can have either one thing, or the other. These things must be clarified."