Der Spiegel magazine reports that several experts had expressed concerns over the safety of the former salt mine in Morsleben, Sachsen-Anhalt.
Staff at the office for radiological protection, and the regional government felt the site was not suitable for storing nuclear waste, the magazine reported.
Merkel, who was German environment minister from 1994 until 1998, wrote to the Sachsen-Anhalt state Environment Ministry saying there was no safety problem, and told officials there to stop interfering.
But current Environment Minister Sigmar Gabriel says that current rules on safety would have ruled Morsleben out of contention as a nuclear waste storage site.
A court halted operations at the site in 1998, after it was decided that unified German law would not recognise the older East German permission to use it. Since then more than €2 billion has been spent on stabilising it as it was threatening to collapse.