Media showed Merkel's Christian Democratic Union beating the Social Democrats by 33 percent or more to around 31 percent.
Berlin: Chancellor Angela Merkel's conservatives won a state election Sunday in their center-left rivals' traditional heartland, a stinging blow to the German leader's challenger in September's national vote.
The western state of North Rhine-Westphalia is Germany's most populous and has been led by the center-left Social Democrats for all but five years since 1966.
It is also the home state of Martin Schulz, the Social Democratic challenger seeking to deny Merkel a fourth term in the Sept. 24 national election.
Projections for ARD and ZDF public television, based on partial counting, showed Merkel's Christian Democratic Union beating the Social Democrats by 33 percent or more to around 31 percent. They gave the Greens, the junior coalition partners in the outgoing state government, only 6 percent.
Governor Hannelore Kraft's coalition with the Greens lost its majority in the state legislature. Conservative challenger Armin Laschet, a deputy leader of Merkel's party, was set to replace her.
"The CDU has won the heartland of the Social Democrats," said the conservatives' general secretary, Peter Tauber, calling it a "great day" for the party.
"This is a difficult day for the Social Democrats, a difficult day for me personally as well," Schulz, who wasn't on the ballot Sunday, told reporters in Berlin. "I come from the state in which we took a really stinging defeat today."
But he urged the party to concentrate now on the national election. He said that "we will sharpen our profile further - we have to as well."
"We will continue fighting; the result will come on Sept. 24," Schulz said.
The Social Democrats' national ratings soared after Schulz, a former European Parliament president, was nominated in January as Merkel's challenger. But defeats in two other state elections since then had already punctured the party's euphoria over Schulz's nomination, and its ratings have sagged.
The projected result in Sunday's election, the last before the national vote, undercut the party's previous post-World War II low in North Rhine-Westphalia of 32 percent.
The projections put support for the pro-business Free Democrats, who are eyeing a return to the national parliament at September, at a strong 12 percent. The party - whose national leader, Christian Lindner, led its election effort in North Rhine-Westphalia - has tended to ally with Merkel's conservatives over recent decades.
The nationalist Alternative for Germany was seen winning 7.5 percent, giving it seats in its 13th state legislature, and the opposition Left Party around 5 percent.
A likely outcome appeared to be a "grand coalition" of the biggest parties under Laschet, though it was also possible that a slim center-right majority for the CDU and Free Democrats would emerge.
A "grand coalition" would mirror Merkel's national government, in which the Social Democrats are the junior partners.
After a blaze of publicity earlier this year, Schulz - who chose not to join the government when he returned to Germany in January - has struggled to maintain a high profile. He has focused on addressing perceived economic injustices, but critics have accused him of providing too little detail of his aims.
Kraft told ARD television she had "asked Martin Schulz to let national politics wait until the election was over."
Asked whether that was smart, she replied: "I said I would take responsibility for that, and I'm doing that this evening." She resigned as her party's regional leader.
Merkel's conservatives sought to portray Kraft's government as slack on security, and also assailed what they said is regional authorities' poor handling of education and infrastructure projects. The region of 17.9 million, nearly a quarter of Germany's population, includes Cologne, Duesseldorf and the Ruhr industrial region.
Merkel's party seemed keen not to appear too euphoric, insisting that regional issues played the key role.
Asked about Germany's government after September her chief of staff, Peter Altmaier, said that "we always have to keep a cool head ... we shouldn't talk about coalitions before the harvest is in."
National polls show the Social Democrats trailing Merkel's conservatives by up to 10 points after drawing level earlier this year.