Chancellor Angela Merkel on Sunday vowed to work with the Social Democrats for the "good of Germany" as the centre-left party agreed to join her new coalition, but the veteran leader will go into her fourth term with weaker cards than before.
Two in three of the SPD's rank and file voting in a crunch referendum backed a new partnership with Merkel's conservatives, heralding an end to the political stalemate that has plagued Europe's biggest economy since September's inconclusive elections.
But the chancellor, in power for 12 years, has has had to pay a high price to coax the reluctant Social Democratic Party (SPD) back into another loveless "grand coalition".
Congratulating the SPD for its "clear result", Merkel said she was looking forward to "further cooperation for the good of our country," according to a tweet attributed to her on her CDU party's account.
Stung by their worst post-war results, the SPD had initially ruled out another four years under Merkel's shadow.
But after Merkel's attempt to cobble together a government with two smaller parties failed, the SPD relented.
With the party riven over the way forward, the leadership promised its more than 460,000 members the final say on any coalition deal.
"We now have clarity. The SPD will be in the next government," said SPD's caretaker chairman Olaf Scholz, adding his party plans to send three male and three female ministers to the cabinet.
European partners waiting impatiently for Germany to end its longest stretch of coalition haggling since the end of the war heaved a sigh of relief, with French President Emmanuel Macron calling the SPD decision "good news for Europe."
In a nod to the "GroKo" as the grand right-left coalition is known in Germany, European Commission vice president Frans Timmermans wrote on Twitter: "GroGO! For solidarity in Germany and EU!"
Merkel is expected to launch her fourth government by mid-March. But the long-serving leader faces a far rockier road ahead.
A crushing majority enjoyed by her conservatives and the SPD in the last coalition has been trimmed to a slim 56% (399 out of total 709) of seats in parliament this time round.
Both sides had been weakened as voters angry about the arrival of more than a million asylum seekers in Germany since 2015 turned to the far-right party Alternative for Germany (AfD).
The AfD, which would be the biggest opposition party in Germany as the SPD joins the government, vowed to go after Merkel's CDU over its "continuation of the immigration policy without imposing a limit."
The party's parliamentary group leader Alice Weidel predicted that "the bill will come at the latest in 2021."
Wary of ceding further ground to the far-right Islamophobic outfit, Merkel's conservatives and the SPD have agreed to review their cooperation in two years.
Dissenting voices in the SPD also promise to keep the long-time partners on their toes.
The SPD's youth chief Kevin Kuehnert, who ran an impassioned campaign against the planned coalition known as "GroKo", expressed disappointment at Sunday's vote result.
"When criticism is necessary, then it will come from us," he vowed, adding that young Social Democrats won't rest until there is a "fundamental renewal" in the party.
The tension within the party over its partnership with Merkel was illustrated by the silence that met news that the "yes"-camp prevailed, prompting Spiegel Online to headline its story "Hardly any rejoicing".
Within the ranks too, Merkel, who once seemed invincible, is looking increasingly vulnerable as calls grow louder for change.
Opponents of her liberal refugee policy have grown more outspoken, while the conservative wing of her party is seething at having lost control of the powerful finance ministry to the Social Democrats as part of the coalition deal.
For the chancellor,who is under pressure within her party to rejuvenate the ranks, the clock is essentially ticking to groom her successor.
In a bid to tamp down criticism, Merkel has brought one of her most outspoken CDU critics, Jens Spahn, into her next cabinet as health minister.
Spahn, 37, a former deputy to hardliner Wolfgang Schaeuble at the finance ministry, has repeatedly slammed Merkel's centrist policies, particularly on immigration.
He has also advocated a sharp conservative shift in a bid to woo back voters from the AfD, which garnered nearly 13% in the September election.
But crucially, at a congress this week, her party also formally appointed its new general secretary, Annegret Kramp-Karrenbauer, tapped by Merkel to kickstart the renewal process.
Sueddeutsche daily noted that "she is the one who has made it clear that the CDU is now no longer without a successor for Merkel".