Merkel had previously indicated that she planned to seek another two-year term as leader of her Christian Democratic Union at a party congress in December, but appeared to be moving quickly to acknowledge pressure for renewal. The CDU is due to elect a new party chair at a conference in December.
That's a major concession for Merkel, who for years has insisted that the chancellor should also be party leader.
Spahn, in particular, has been an outspoken critic of Merkel's and has advocated that the party move further right on immigration to win back supporters who defected to the far-right Alternative for Germany (AfD).
The other risk for Merkel is that her SPD coalition partners come third in Hesse, which is home to financial hub Frankfurt. Her current coalition took office only in March, after six months of tortuous negotiations, but has become notorious for its squabbling.
Known as the "mini-Merkel", 56-year-old Annegret Kramp-Karrenbauer - former state premier of tiny Saarland - is a loyal follower of the chancellor's centrist line that has shaped CDU and German politics over the past two decades.
But she made clear that she wanted to remain as chancellor, a position she has held since 2005, CNN affiliate RTL reported, citing party sources.
Such results would make various regional coalitions possible, with the Greens potentially joining parties to their right or left or even, if their results are exceptionally good, having a chance to make their local leader Tarek Al-Wazir - now Bouffier's deputy - the state governor.
The Latest: Merkel reportedly ready to step down from party
"Angela Merkel knows quite clearly that she is living through the last months or through the a year ago of her chancellorship", Werner Patzelt, a politics professor at the Technical University in Dresden, told NBC News.
Several CDU politicians have announced they want to succeed Ms Merkel as party leader.
Just two weeks earlier, Merkel's conservative CSU sister party suffered a similar drubbing in Bavaria.
Observers see Merkel decision as a further sign of her dwindling political power.
"With unresolved issues in the Eurozone, budget issues with Italy and the potential for a bumpy Brexit, the European Union will be looking to Merkel and Macron for leadership", he explained.
The EU is trying to negotiate a Brexit deal with Britain, deal with a budget crisis in Italy and faces the prospect of populist anti-establishment parties making gains in the European Parliament elections in May. With surprising candor, she has mentioned over the past few days how hard it is to manage one's own succession after so many years at the helm.
Increasing numbers of SPD members have been calling for the party to quit government and lick its wounds in opposition, as it is presently polling below AfD nationwide, at 15 percent to the far-right's 16 percent.
India win toss, bowl against West Indies in third ODI
The player once dubbed "Captain Cool" retired from Tests in 2014 and then relinquished the limited-overs captaincy in 2017. Other significant announcements include the addition of Krunal Pandya and Washington Sundar for the six T20Is.