BERLIN — Chancellor Angela Merkel’s attempt to form a new German government collapsed on Sunday as one of the four parties she was seeking to bind together walked out after hours of negotiations, citing irreconcilable differences and throwing open the question of what comes next.

The breakdown after weeks of intense talks aimed at forming a new government leaves Germany in limbo at a time when Europe and much of the Western world is looking to Berlin for leadership.

New elections are possible, but there are fears among the establishment that such a move could further empower the far right. It is also possible that Ms. Merkel’s party would try to form a minority government, but the breakdown in talks has further weakened her.

Appearing before reporters, flanked by the members of her conservative bloc, Ms. Merkel said she believed the talks could have succeeded. But she said she respected, even as she regretted, the decision of the business-friendly Free Democrats to quit the negotiations after four weeks.