With only two weeks to go until some 62 million people go to the polls to elect a leader for Europe's most populous country, the showdown could yet spice up an election campaign that has so far failed to spark enthusiasm.
Although Merkel's Christian Democrats (CDU) are flying high in the polls, a recent survey suggested the debate, only the fourth of its kind in Germany, could yet prove critical to the outcome of the September 27 election.
According to a poll by the Forsa institute, over half of German voters (56 percent) said the debate would have at least some influence on how they would vote, with 42 percent saying it would have no impact on their decision.
And with organisers hoping that at least 21 million people will tune in at 8:30 pm on Sunday, there are still plenty of undecided voters up for grabs.
However, Steinmeier, vice-chancellor and foreign minister in Germany's uneasy grand coalition, has a vast amount of ground to close, with a recent poll putting his Social Democrats on 23 percent, far behind Merkel's conservatives on 36 percent.
One of the moderators, RTL television news chief Peter Kloeppel, said he hoped the debate would finally ignite what has been an uninspiring campaign.
"We can try to pour some oil onto the fire but they will both have to play their part. We can only hope they want to, we cannot order them to," he told the daily Nürnberger Zeitung.
"It's a duel, not a wild shootout," he added.
Both candidates have shied away from direct confrontation, finding it difficult to attack each other's record as they have been coalition partners for the past four years.
It was also reported at the weekend by news magazine Der Spiegel that Merkel would not take part in another televised debate which was planned to include all the parties' top candidates.
Producers of the ZDF show have been trying to agree a date with Merkel since March, they said on Friday, but without success. They have eventually decided for September 16, at 11 am - when Merkel allegedly has no official engagements.
Having pondered keeping her chair but leaving it empty, the broadcaster instead accepted the offer of Lower Saxony Minister President Christian Wulff.
Steinmeier recently tried to draw Merkel out of her defensive shell, taunting her by saying, "Simply posing on red carpets - that is not enough in the long run."
But Merkel has deflected all such attacks, insisting: "I'm not going to become more aggressive but put my arguments in the foreground."
Speaking about the debate, however, Steinmeier told the Ausburger Allegemeine newspaper, "The TV debate is not about our fighting styles," but rather the substance of the arguments.
But Claus Leggewie from the Institute for Advanced Study in the Humanities in the western city of Essen warned that few sparks were likely to fly.
“Here come two people from the same government and tell us how it all went - not very exciting," he told the WAZ daily.
Spectators hoping for fireworks from the pair may yet be disappointed as both are seen as safe pairs of hands and cautious personalities.
A recent debate in the parliament on Afghanistan and the state of the country produced nothing in the way of direct conflict between the two.
Polls after the television debate before the last election in 2005 showed then incumbent Gerhard Schröder - dubbed the "media chancellor" for his telegenic style - trounced Merkel but failed to gain a boost as she beat expectations in the actual election.
But after four years of seeing their assured chancellor performing effectively on the world stage, expectations are higher this time around for Merkel's performance.
Nearly two-thirds of Germans (64 percent) believe Merkel will "win" Sunday's debate, compared to only 15 percent who think Steinmeier will triumph, according to a poll for ARD public television.
Germans turned off by the lacklustre political debate in their country at least have a choice.
Although the debate is being carried live on six main channels in Germany, a rival channel is showing "The Simpsons - The Movie" at the same time and is running a nationwide publicity campaign with ads saying "Vote Simpsons."