“From today onwards the competition between the AfD and the CDU for the leadership of the middle class camp has been set alight,” AfD deputy leader Beatrix von Storch wrote on Facebook on Sunday.
Von Storch was responding to news that the AfD had won 14.2 percent of the vote in Berlin state elections and had thus come within three percentage points of Angela Merkel’s Christian Democratic Union (CDU).
The CDU scored 17.6 percent, their worst post-war result in the German capital.
With national elections approaching in 2017, it was the latest poor result for the beleaguered CDU, which came third behind the AfD in state elections in Mecklenburg-Western Pomerania earlier in September.
“In 2017 we will witness Angela Merkel fighting for her political life and the AfD will become the third largest political power in Germany - at the least,” a triumphant von Storch wrote.
Party co-leader Jörg Meuthen was slightly more sober in his analysis, saying nevertheless that "we are firmly convinced that we will land in the Bundestag (national parliament) with a double-digit score" next year.
The AfD harnessed a wave of anger over the refugee influx to claim around 14 percent of the vote in a city that has long prided itself on its diversity and international appeal.
The strong AfD result, thanks to support especially in the vast tower block districts in Berlin's former communist east a quarter-century after reunification, meant it has now won opposition seats in 10 of Germany's 16 states.
But its fifth-place showing fell well short of its expectations, leading some analysts to suggest its spectacular success in recent months is losing some steam.
Its string of victories nevertheless indicates that for the first time since World War II, a party to the right of the CDU has established a foothold in German politics.
Berlin was the fifth regional poll in a row showing losses for the CDU that Merkel will have to answer for, as voter angst over the arrival of one million refugees and migrants last year shakes her once firm standing with the electorate.
Markus Söder, a vocal critic from her conservative bloc, called the vote a "massive wake-up call" for her to impose strict limits on migration.
"The Christian Union risks a lasting and giant loss of trust among its core voters," the Bavaria state finance minister told Bild daily.
Analysts said the drubbing would force Merkel, widely seen as Europe's most influential leader, to focus on German affairs at a time when the EU is facing sluggish economic growth, growing divisions over its migration policy, and Britain's impending exit.
The Berlin vote continued a trend of a fracturing of the electorate and surging support for fringe parties, with both the hard left and the right wing the winners of the day.
It also mirrored the march of anti-migrant parties in France, Austria and the Netherlands and Republican maverick Donald Trump in the United States.
Foothold for hard right
The German leader was expected to acknowledge the defeat at a news conference later on Monday but also emphasised the specific, local aspects of the race.
"The CDU lost, but this time it is not primarily a defeat for the chancellor," news website Spiegel Online wrote.
But it noted that although the AfD had fallen short of its own goal of a second-place finish, "the right-wing populists - sad but true - now belong to the new normal in Germany".
Political scientist Karl-Rudolf Korte of the University of Duisburg-Essen said the series of setbacks would force Merkel to focus on shoring up domestic support at the expense of international crisis management.
"Merkel will stay in Germany more and travel abroad less, to explain her policies to citizens and why they should vote for her again next year," he told public broadcaster ZDF.
Both of the mainstream parties which have taken turns governing Germany since the war incurred heavy losses, with the SPD shedding nearly seven points since the last election five years ago and the CDU almost six points.
The hard-left Die Linke, which has roots in the East German communist party that built the Berlin Wall, gained four points to capture 16 percent of the vote.
And the ecologist Greens landed in fourth place with 15 percent, meaning they will likely form a ruling coalition with the SPD and Linke.