Though Chancellor Angela Merkel secured a fourth term with her Christian Democratic Party receiving the most votes in the election, the Christian Democrats and Merkel will now have to work with the AFD.
The far-right party managed to win a number of direct mandates in several constituencies, and was the largest party in the state of Saxony.
One day after the elections, Bavarian CSU party, Horst Seehofer, announced that he will maintain and deepen the right-wing profile of this party.
The center-left Social Democratic Party fared even worse and plans to abandon the "grand coalition" with Merkel's party to become their opposition in parliament.
The AfD's top candidate, Alexander Gauland, caused a scandal during the election campaign by saying Germans should be proud of their World War Two soldiers.
Much of the party's strength is concentrated in East Germany where the AfD came second.
Far-right German Leader After Election Surge: Jews Have Nothing to Fear
But while supporters were celebrating the historic result, tensions arose within the AfD. Their result also comes after Germany welcomed more than 1 million refugees.
But while supporters were celebrating the historic result, tensions arose within the AfD.
Whatever impact that decision may have, a debate is expected to continue on migration in Germany where more than a million refugees arrived since 2015 and social tensions remain despite an improving economy.
The new parliament's "council of elders" must be formed within 30 days of the German election, leaving its members until October 24 to agree on a seating and room order. Assuming this holds, it would make the SPD the official opposition party, edging out the AfD in that role.
"We think this country urgently needs political change, but we no longer consider our party in a position to take it in hand" after months of infighting, she said Tuesday.
The CSU saw its vote share tumble by 10% on Sunday, with losses directed mostly to the Alternative for Germany (AfD) party. Merkel likely has no option but to seek a coalition with the Greens and the pro-business Free Democratic Party.
What matters is that Ms. Merkel, unlike too many politicians in other countries, was able to convince a majority to vote for stability and common decency, rather than abandon themselves to the hateful rhetoric of division.
Shouting slogans such as "All Berlin hates the AfD!" and "Nazi pigs!", the demonstrators gathered outside a building in Germany's capital where the anti-immigrant party's leaders were celebrating winning an estimated 13.1 percent of the votes in Sunday's federal poll.
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