“We must take care that we do not retreat out of a fear of potentially violent radicals,” she said.
She was speaking after the Deutsche Oper in Berlin decided to call off November’s production of Idomeneo, citing “incalculable” security risks.
Interior Minister Wolfgang Schaeuble also attacked the opera company’s decision as “crazy”.
He hosted the conference on Wednesday – the start of a two-year campaign for improved integration of Muslims in Germany, most of whom are of Turkish origin.
He told the German newspaper Sueddeutsche Zeitung that Muslims in Germany had to accept European norms and values.
Mr Schaeuble wants their imams to be educated in Germany rather than Turkey.
Merkel last week also stood up for the Pope saying he was misunderstood.
Michelle Malkin has more on this and other cancellations.