The vote in Schleswig-Holstein, Germany's northernmost state, comes as a recent surge in nationwide polls for the centre-left Social Democratic Party (SPD) since new leader Martin Schulz was crowned in February has faded.
Supporters are increasingly fearful that the momentum imparted by their new leader will not carry them into the chancellery, which Merkel and her Christian Democratic Union (CDU) have held against all comers since 2005.
As at the national level, neither the SPD nor the CDU are expected to achieve an absolute majority in the regional parliament in the state capital, the Baltic Sea port city of Kiel.
But if the CDU emerges leading a governing coalition, it will be a further blow to left-wingers' confidence -- one week ahead of yet another knife-edge regional vote in SPD stronghold North Rhine-Westphalia.
"For Angela Merkel, an election victory for her party would be a turning point," commented conservative daily Die Welt.
"For the first time since the beginning of her chancellorship in 2005, the CDU could reconquer one of the states they've lost."
The CDU lost a string of state elections over the past two years as voters punished Merkel for her liberal refugee policy that allowed more than a million asylum seekers into Germany since 2015.
But with the pace of new arrivals sharply slowing, surveys show the conservatives gaining ground.
A recent survey of around 1,800 people for public broadcaster ZDF showed the CDU with 32 percent support in Schleswig-Holstein and the SPD with 29.
One key unknown is whether the Germany-wide collapse in support for anti-euro, anti-Islam party Alternative for Germany (AfD) after a vicious internal falling-out between moderates and hardliners will be reflected in the state election results.
Polls show the AfD uncertain of passing the five-percent threshold to enter parliaments in both Schleswig-Holstein and North Rhine-Westphalia -- whereas at the end of last year it was the third-most-popular party nationwide.
But if the AfD or the far-left party Die Linke enter the legislatures, this could make for an upset in larger players' coalition calculus.
By 0900 GMT, turnout appeared to be higher, with 21.55 percent of the 2.3 million eligible voters having already cast their ballot compared to 17.7 percent at the same time during the last polls in 2012.
Wind and fury
Beyond its significance as the last-but-one regional election before September, there are plenty of local peculiarities in Sunday's vote.
Popular SPD state premier Torsten Albig, 53, has led a coalition of SPD, Greens, and local Danish minority party SSW since 2012.
He squares off against CDU challenger Daniel Guenther, who is 10 years younger and an energetic opposition leader at the regional parliament.
The centre-right group there has sparked debate across Germany in recent years with populist proposals like requiring pork to be served in school canteens -- a nod to voters fearful of Islam's influence on public life.
This year's campaign has seen battles over education, policing and roads, a top concern in a state with a population of 2.8 million thinly spread across almost 16,000 square kilometres.
Another battleground is wind farm construction near residential areas -- no small matter in a windy coastal region whose turbines are a key element in Germany's "energy transition" away from nuclear and fossil fuels.
Both major parties have been sending their heaviest hitters to Schleswig-Holstein in recent days, with Schulz making appearances in Kiel and Luebeck on Thursday.
But his interventions have done little to counteract criticism that the former president of the European Parliament has been surfing a wave of euphoria -- and profiting from his own relative newness in German national politics -- rather than offering concrete attacks against Merkel and the right.
In private, high-ranking SPD leaders downplay the importance of the regional elections as indicators for September's federal ballot, arguing that the party still has plenty of internal rebuilding to do as it readies itself for the decisive campaign.
They have an uphill battle ahead to defeat Merkel, a leader so popular that one CDU election poster in 2013 simply showed the chancellor's fingers clasped in their habitual diamond shape alongside the slogan "Germany's Future In Good Hands".
Polling stations close at 6pm (1600 GMT), with results expected shortly