Merkel's comments suggest Germany will strongly encourage leaders meeting at a Brussels summit later on Thursday to commit Europe to maintaining sanctions until Russia meets the terms of the deal it struck last month with Kyiv to lay down arms.
"We cannot and will not lift the sanctions that expire in July or September until the demands of the Minsk agreement have been fulfilled. That would be wrong," Merkel told Germany's Bundestag lower house of parliament on Thursday.
EU countries vary widely in their enthusiasm for sanctions on Russia, the bloc's leading energy supplier. While some governments want to send a tough signal to Moscow by renewing the July sanctions now, others say the ceasefire should be given a chance to work and want to wait until June to take a decision.
European Council President Donald Tusk urged EU leaders on Thursday to keep up pressure on Russia until Minsk is fully implemented.
"This must ultimately conclude in Ukraine regaining control of its borders as foreseen in the (Minsk) plan," he told a news conference before the summit.
Tusk, Merkel and French President Francois Hollande have drawn up a compromise deal linking sanctions to full implementation of Minsk.
That would effectively extend sanctions at least until the end of the year, because the Minsk accord contains a year-end deadline for Ukraine to recover full control over its border.
However, a formal decision on renewing the July sanctions on Russia's energy, finance and defense sectors would not be taken until the next summit in June.
Merkel spoke by phone to U.S. President Barack Obama on Wednesday and they also agreed there would be no easing of sanctions until Russia had fulfilled all of its commitments under Minsk, the White House said.
EU officials have said they think the compromise is capable of winning unanimous support despite divisions among EU leaders.
"There's wide consensus within the EU that the future of sanctions is strongly tied to the implementation of the Minsk treaty," Finnish Prime Minister Alexander Stubb told reporters in Helsinki on Wednesday.
Ukrainian Prime Minister Arsenii Yatseniuk said EU leaders should discuss renewing existing sanctions or scaling up sanctions if Russia failed to implement the Minsk deal, but he rejected any talk of easing the measures.
"If (Russian President Vladimir) Putin splits the unity ... among the leaders of the EU member countries this will be the biggest success story of President Putin and this will be a disaster for the free world," he told reporters in Brussels after a pre-summit meeting with Tusk on Thursday.