In announcing the winner on NBC's "Today Show" Wednesday, Time Managing Editor Nancy Gibbs pointed to Merkel's handling of a vast array of issues -- including the European economic crisis tied to countries such as Greece, the flood of refugees into the continent from the Middle East and Africa and several deadly terrorist attacks in the region.
"No one was tested the way she was," Gibbs said. "...She has stepped up in a way that was uncharacteristic, even for her."
Speaking to CNN, Time editor-at-large Karl Vick said the award was given each year to the newsmaker who, for good or ill, was considered to have had the greatest impact on world events.
"It's pretty easily Angela Merkel," he said, describing her as "the de facto leader of the European Union" by virtue of being leader of the EU's largest and most economically powerful member state.
Twice this year, he said, the EU had faced "existential crises" which Merkel had taken the lead in navigating -- first the Greek debt crisis
faced by the Eurozone, and then the ongoing migrant crisis.
Germany led the way in welcoming migrants, committing to accepting 800,000 this year, far more than any other European country, and becoming the preferred destination for the migrants.
"Her response to that was extraordinary, and a lot of people say out of character, but really tectonic," said Vick.
"Once again you have the question of the future of Europe at play, and her at the helm."
From physicist to first female chancellor
Merkel, 61, is the fourth woman to be named individually as Time's Person of the Year since Charles Lindbergh was the first to secure the honor in 1927.
The others were Wallis Simpson, the divorcée for whom King Edward VIII abdicated the British throne; Queen Elizabeth II, and former Philippines President Corazon Aquino.
The daughter of a Lutheran minister and a teacher, Merkel was raised in East Germany, where she showed strong academic ability and forged a successful career as a physicist.
But after the fall of the Berlin Wall in 1989 she found a new calling in politics. In 1990, she was elected to Germany's parliament, the Bundestag, and within a year she gained her first Cabinet post.
She became the country's first female chancellor in 2005, and, eight years later, was sworn in for her third term in Germany's highest office.
Known for her thorough, analytical approach to politics, she sticks closely to public opinion, and enjoys high public approval ratings, despite a recent slide widely attributed to her response to the migrant crisis.
Affectionately nicknamed "Mutti," or "mommy" by the German public, she has a modest personal style, having lived in the same ordinary apartment building for more than a decade, and frequently attending soccer games with her second husband, a quantum chemist and professor.
Trump: Merkel's 'ruining Germany'
Last year, the New York-based magazine tapped those behind the fight against the Ebola virus
as its persons of the year.
The German leader's selection contrasts with the result of an online poll on the finalists for this year's title
At the time the winner was announced on NBC, Baghdadi was the runaway winner in that online survey with some 64% of the vote. Trump was a distant second with about 18% support, with Putin placing third with around 11% support.
Merkel was third-to-last, ahead of only Jenner and Rouhani.
to Merkel's selection on his Twitter account, saying that he wasn't surprised that Time hadn't picked him, "despite being the big favorite."
"They picked the person who is ruining Germany," he wrote, in apparent reference to Merkel's migrant-friendly policies. Trump is currently facing a domestic and international backlash
for his proposal to ban Muslims from traveling to the United States.
During the "Today Show" presentation, Gibbs ranked Baghdadi as the second contender, followed by Trump, Black Lives Matter activists and Rouhani.