The show, "Art from the Holocaust", brings together 100 works on loan from Israel's Yad Vashem memorial by 50 artists created in secret between 1939 and 1945 while they were confined to the camps or ghettos.
Twenty-four of the artists did not survive the Nazi period, even as their works endured.
The drawings and paintings on display at Berlin's German Historical Museum depict the suffering, drudgery and terror endured by the detainees.
Merkel, looking ahead to the opening and tomorrow's commemorations of the 71st anniversary of the Auschwitz liberation in her weekly video podcast, said such exhibitions served as a crucial tool for educating younger generations.
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She cited in particular the fears of German Jewish leaders that the need to impart the lessons of the Holocaust has grown more urgent with the influx of a record 1.1 million asylum seekers to Germany last year, many from the Middle East.
The head of Yad Vashem, Avner Shalev, called the works on loan irreplaceable "treasures", many of which were hidden by their creators and only discovered after the war.
They are "the expression of human beings under these unique circumstances to try and prevail... Above the atrocities and deaths," he told reporters at a press preview of the exhibition.
"After thinking and rethinking, we thought it might be the right time, the right place, to bring this collection to Germany."
"That moved me very much," she was quoted as saying by German news agency DPA.