"The negotiations must first clarify how we will disentangle our interlinked relationship... and only when this question is dealt with, can we, hopefully soon after, begin talking about our future relationship," Merkel said in Berlin.
A spokeswoman for Merkel said earlier on Wednesday that Britain will remain a key ally for the European Union and NATO.
"We must not forget that the UK is still a partner, in NATO and in Europe," Ulrike Demmer told journalists, adding that London's Brexit notification would give "us more clarity" on how Britain planned to handle the divorce process.
"On this basis, the 27 member states and EU institutions will define their interests and aims," Demmer said, adding that Berlin was "well prepared" for the coming negotiations.
German foreign ministry spokesman Martin Schaefer echoed the message, saying that "we are proud of the clear, unanimous stance of the EU 27, that they stood their ground that there would be no pre-negotiations. They begin now."
Underlining the importance of quickly obtaining clarity on the negotiation process, Schaefer emphasised that "uncertainty is poison for the people - the EU citizens, Germans who live in Britain and what their future status would be, likewise for British citizens living in the European Union."
"Perhaps it's even more poisonous for economic trade and investment relations," he added, questioning if London "really understood what kind of impact there could be for the British economy when all these questions have to be addressed," and noting the "damn tight" two-year negotiation period.
Britain formally launched the process for leaving the European Union on Wednesday, a historic move that has split the country and thrown into question the future of the European project.
Just days after the EU's 60th birthday, Britain became the first country ever to seek a divorce, striking a blow at the heart of the union forged from the ashes of World War II.
Nine months after the shock referendum vote to leave the bloc, Britain handed over a momentous letter to the EU president in Brussels, triggering Article 50 of the bloc's Lisbon Treaty and firing the starting gun on a two-year countdown towards Brexit.
The notification kickstarts months of what will be protracted and difficult negotiations between London and Brussels over outstanding bills, immigration and future trade ties.