A day after Merkel pledged in Paris to "soon" decide how to help battle the IS group in Syria, she met cabinet ministers in charge of security ahead of afternoon meetings of the major parties' parliamentary groups.
"Germany will play a more active role than before," said the defence policy spokesman of her conservative CDU/CSU parliamentary group, Henning Otte, in a statement.
While the government had not yet issued a statement, Otte said Germany would go beyond its current arms supplies and training to Iraqi Kurdish forces combating the IS.
The parliamentary groups of Merkel's conservatives as well as of her coalition partners, the centre-left Social Democrats, were to meet from 1600 GMT to discuss how to support France in the battle against IS.
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Post-war Germany has been traditionally reluctant to send troops abroad, although it has joined UN-mandated missions in the Balkans and elsewhere, and the NATO coalition in Afghanistan.
Germany has not taken part in air strikes against the IS in Syria and Iraq flown by US and French aircraft.
"Islamist terrorism is a threat to Germany and to world peace. Together with France and all other countries that oppose Islamist terror, we will provide everything necessary to the battle."
He added that all requests by the alliance against IS and by France "must be examined with an open mind".
Germany sent fighter aircraft for reconnaissance missions in Afghanistan between 2007 and 2010.
On Wednesday, Germany announced it would deploy 650 more troops to Mali to relieve the France mission there.