Instead he called her a political descendant of Adolf Hitler and German fascism.
"Ms. Chancellor, you can go to ...," he said, pausing for effect and eliciting giggles from the audience, a group of military officers, cabinet ministers and government officials. "Because she's a woman I won't say anything else."
The leftist leader, who famously called US President George W. Bush "the devil" at a United Nations assembly, slammed Merkel for calling on Latin American leaders to distance themselves from Chavez.
"She is from the German right, the same that supported Hitler, that supported fascism, that's the Chancellor of Germany today," he said.
Chavez said he could confront her about the statements if he attends an upcoming summit of heads of state from Europe and Latin America in Peru.
"Maybe I'll say something to her and she'll get mad and say 'why don't you shut up?"' he said, referencing Spanish King Juan Carlos' 2007 admonition of the loquacious Chavez that touched off a bilateral dispute with Spain.
Chavez on Sunday called Colombian President Alvaro Uribe a "liar" who "shouldn't even run a corner store."
In the past, he has called US Secretary of Defense Donald Rumsfeld "one of the dogs of the devil" and then-President of Mexico Vicente Fox the "lap-dog of the empire."