News site Spiegel reported on Wednesday evening that Merkel's mobile may have been spied on by the US and the German Chancellor is taking the allegations seriously.
She demanded an explanation in a hastily arranged telephone conversation with Obama.
Her spokesman Steffen Seibert said in a statement Merkel made it clear that she found such practices "completely unacceptable".
"The chancellor telephoned President (Barack) Obama" and "made clear that she unequivocally disapproves of such practices, should they be confirmed, and regards them as completely unacceptable," he said.
Merkel had demanded "an immediate and comprehensive explanation" from Washington, Seibert added.
The statement said: "Among close friends and partners, as the Federal Republic of Germany and the US have been for decades, there should be no such monitoring of the communications of a head of government."
"This would be a serious breach of trust. Such practices must be stopped immediately," the chancellor told Obama.
The evidence for Merkel's mobile phone being targeted came from Spiegel which has broken a series of stories about a mass surveillance programme by the NSA.
The evidence has also been viewed by the German security services and was regarded as plausible enough to warrant an call to Obama.
In the conversation Obama told Merkel that the United States was not monitoring her communications, but the White House did not deny reports US spies eavesdropped on her phone in the past.
"The President assured the Chancellor the United States is not monitoring and will not monitor the communications of the Chancellor," White House spokesman Jay Carney said on Wednesday.
Carney was then asked whether US spies could have inadvertently picked up Merkel's communications during a wider sweep of global telephone calls linked to a vast anti-terror program.
He repeated the linguistic formulation of his earlier answer, in a way that did not deny the possibility that the NSA had indeed accessed Merkel's conversations in the past.
Carney stressed that Obama was reviewing the way Washington gathers intelligence "so that we properly balance the security concerns of our citizens and allies with the privacy concerns that all people share."
The latest allegations came as the French newspaper Le Monde stood by claims that Washington had monitored millions of phone calls inside France.
Washington has said many of Le Monde's claims were false, but Obama had another embarrassing call with a foreign leader when he spoke to French President Francois Hollande on Monday.
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