"The United Kingdom will need to quickly clarify how it wants its ties with the European Union to be in future," Merkel said late Monday at a reception for diplomats north of Berlin.
She was speaking just hours after it became clear May would lead Britain into talks to quit the European Union when her last rival in the bid to succeed David Cameron pulled out.
Merkel reiterated that it was now up to London to formally trigger Article 50 to leave the EU following last month's shock referendum backing a "Brexit" or British exit from the Union.
Only then could negotiations on any future relationship between Britain and the EU begin, she added.
Merkel stressed that Britain would remain an important partner for Germany, Europe's top economy, but underlined that its access to the EU's single market depended on respect for key principles including the freedom of movement of EU citizens.
May has said immigration controls would have to be included in any deal for Britain to access the EU's single market.
Merkel once again expressed her regret that Britons had opted to turn their backs on the EU.
"It's a bitter turn of events," she admitted.
"Yet I am firmly convinced that the European Union is strong enough to survive this turning point."