Immediately after winning a close vote last month that boosted his powers, Turkish President Recep Tayyip Erdogan mooted a second referendum on reinstating capital punishment, which would mean an end to the country's EU membership prospects.
Merkel said Berlin would not make it possible for the 1.4 million Turkish voters living in Germany to participate if the referendum were to be held.
"We will not give permission for something we are not obligated to do, and whose content we absolutely reject, for example, the death penalty," she told public broadcaster WDR.
The April referendum had already opened a new rift between NATO allies Germany and Turkey, and inflamed tensions within Germany's three-million-strong community of Turkish origin.
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After Germany and the Netherlands blocked campaign events by Turkish ministers in March ahead of the vote, Erdogan repeatedly accused both countries of using "Nazi" methods.
Relations took a fresh hit with the arrest of German- Turkish journalist for Die Welt daily Deniz Yucel, who was jailed in February on terror charges and is awaiting trial.
Erdogan and top Turkish officials have also threatened to rip up an EU deal for billions in aid in return for Ankara halting a flood of migrants coming to Europe because of a lack of progress in membership talks.
Since the July 2016 failed coup in Turkey and subsequent crackdown, 414 Turkish officials and their families have sought political asylum in Germany, according to the Federal Office for Migrants and Refugees.
Unconfirmed media reports said successful applicants included numerous Turkish military personnel and their families holding diplomatic passports.
Asked by AFP, the German interior ministry said "some cases" involving Turkish diplomatic passport holders had been approved but declined to provide further details.