"I am of the opinion that anyone who sums up the strength and bravery - and we have a long tradition of this behind us in politics - should know that they live in a country where they have nothing to fear," said Merkel at a forum in Berlin to discuss integration in sport.
"The fact that there are still fears for some people for their own situation means we need to send out a clear message: you must not be afraid."
While senior political figures, such as German Foreign Minister Guido Westerwelle and Berlin's mayor Klaus Wowereit, have come out, no current German Bundesliga footballer has revealed his homosexuality.
Bayern Munich president Uli Hoeneß said it was only a matter of time before a Bundesliga player comes out.
"It will happen, sooner or later. All clubs are advised to prepare for this topic, so they will have good answers," said Hoeneß, speaking at the same Berlin forum as Merkel under the slogan "Go your own way".
He also said it would be crucial to "protect as much as necessary" any footballer who were to come out. But the subject is not new in German football.
Back in 2009, former German Football Federation (DFB) president Theo Zwanziger first said footballers should be supported if they wanted to come out and he repeated himself when he left office this January.
Last year, Germany striker Mario Gomez said openly gay footballers "would play as if they had been liberated. Being gay should no longer be a taboo topic."
But national team captain Philipp Lahm advised against it: "An openly gay footballer would be exposed to abusive elements," he told German magazine Bunte last year.
"For someone who does (come out), it would be very difficult."
But a gay Bundesliga footballer, who insisted on anonymity, told German magazine Fluter this week he faced a daily battle of fear and denial, insisting he would not feel safe if his sexuality was revealed.