In sharply worded remarks, Merkel's spokesman Steffen Seibert expressed shock at the weekend rally by Ku Klux Klan members and other white nationalists in Charlottesville.
"The scenes at the right-wing extremist march were absolutely repulsive - naked racism, anti-Semitism and hate in their most evil form were on display," he told reporters.
"Such images and chants are disgusting wherever they may be and they are diametrically opposed to the political goals of the chancellor and the entire German government."
Seibert said Merkel stood in solidarity "with those who peacefully oppose such aggressive, far-right views".
He underlined "how much the chancellor regrets the death of a woman who fell victim" to "an evil attack" by a car driver.
Asked about possible links between German neo-Nazi groups and the Charlottesville marchers, Seibert said he was unaware of any connection and expressed confidence that US authorities would conduct a thorough investigation.
One woman died and 19 people were injured when a car ploughed into a crowd of people after the rally by white supremacists turned violent. Two state police officers died in a helicopter crash near the area.
Some of the marchers used Nazi symbols, slogans and gestures that have been explicitly banned in Germany since World War II.
President Donald Trump has come in for virulent criticism after an initial failure to explicitly condemn the white nationalists for their role in the protest.
A full day after the violence erupted, the White House insisted Sunday that Trump's condemnation included all such groups.