"The essential and also resolute fight against terrorism in no way justifies general suspicion against people of a specific faith, in this case people of the Muslim faith or people of a certain background," she told reporters in unprompted remarks about measures enacted by US President Donald Trump.
"This approach in my view contradicts the basic tenets of international aid to refugees and international cooperation," she said ahead of talks with Ukrainian President Petro Poroshenko.
Merkel said her office and the German foreign ministry would do "everything in their power" to clarify the legal situation "in particular for those with dual citizenship" of Germany and the blacklisted countries.
She said Germany would "emphatically represent their interests to achieve legal certainty" for those potentially affected by the ban.
Merkel, widely seen as Europe's most powerful leader, on Sunday had already slammed the restrictions on immigration imposed by Trump, with a spokesman saying it was "not justified" to target people based on their background or religion.
The spokesman, Steffen Seibert, said she had raised the issue in a telephone call with Trump on Saturday, reminding him of obligations under international human rights law including the Geneva Conventions' requirements on refugees.
Trump sparked an uproar at home and abroad after signing a sweeping executive order on Friday suspending refugee arrivals and barring visas for travellers from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen for the next three months.
Four federal judges moved to halt deportations, around 300 people were stopped or detained worldwide and US civil rights lawyers warned the battle could head to the Supreme Court.
And the European Commission said Monday it would work to ensure EU citizens are not affected by any "discrimination" caused by the ban.
Trump has attacked Merkel's liberal refugee policy, which has permitted more than one million asylum seekers to arrive in Germany since 2015, as a "catastrophic mistake" that heightened the risk of terror attacks.
In December, a Tunisian rejected asylum seeker ploughed a lorry into crowds at a Christmas market in central Berlin in an assault that claimed 12 lives.
However Germany has been spared the large-scale jihadist carnage that has struck neighbouring France and Belgium.