Lawmakers, meanwhile, made clear they weren't satisfied with a U.S. statement that it isn't monitoring her communications now. And Germany's defense minister added that Europe can't simply return to business as usual in trans-Atlantic ties following a string of reports that the U.S. was spying on its allies.
Merkel's government says she complained to President Barack Obama on Wednesday after receiving information her cellphone may have been monitored. The White House said the U.S. isn't monitoring and won't monitor Merkel's communications - but didn't address what might have happened in the past.
The Foreign Ministry said U.S. Ambassador John B. Emerson is expected to meet Thursday afternoon with Foreign Minister Guido Westerwelle, who will "spell out the position of the German government."
The U.S. Embassy said it had no comment.
Defense Minister Thomas de Maiziere told ARD television the alleged surveillance would be "really bad" if confirmed. "The Americans are and remain our best friends, but this is absolutely not right," he said.
"I have reckoned for years with my cellphone being monitored, but I wasn't reckoning with the Americans," said de Maiziere, who was previously Merkel's chief of staff and Germany's interior minister.
"We can't simply return to business as usual," de Maiziere said when asked about possible effects on U.S.-German and U.S.-European relations.
This week, France demanded an explanation of a report the U.S. swept up millions of French phone records, and also summoned the American ambassador.
Leaders of the European Union's 28 countries meet in Brussels later Thursday for a long-planned summit.
Germany, which has Europe's biggest economy, has been one of Washington's closest allies in Europe. The United States was West Germany's protector during the Cold War and the country is still home to thousands of U.S. troops.
A German parliamentary committee that oversees the country's intelligence service held a meeting Thursday to discuss the matter.
Its head, Thomas Oppermann, said he was informed that news magazine Der Spiegel had confronted the chancellery with documents on the matter, that the suspicion of surveillance was reviewed and found to be "plausible." Der Spiegel has published material from NSA leaker Edward Snowden, but didn't detail its sources on the cellphone story.
Recalling previous reports to the panel that U.S. authorities have said they didn't violate German interests, Oppermann said ahead of the meeting that "we were apparently deceived by the American side."
White House spokesman Jay Carney said Wednesday that Obama assured Merkel that "the United States is not monitoring and will not monitor the communications of the chancellor."
The German government didn't say what Merkel thought of Obama's response, but a prominent lawmaker with her party who heads Parliament's domestic affairs committee criticized Carney's statement.
"I think we are all outraged, across party lines," Wolfgang Bosbach told Deutschlandfunk radio. "And that also goes for the response that the chancellor's cellphone is not being monitored - because this sentence says nothing about whether the chancellor was monitored in the past.
"This cannot be justified from any point of view by the fight against international terrorism or by averting danger," he said.
The federal prosecutors' office, which is responsible for cases involving national security, said it had launched an "observation" of the matter - a procedure that falls well short of a formal investigation and is aimed at determining whether there are grounds for one. It said it would seek information from German authorities.
Merkel had previously raised concerns over allegations of mass electronic eavesdropping when Obama visited Germany in June, demanded answers from the U.S. government and backed calls for greater European data protection. Her government is striking a markedly sharper tone now, and signaling frustration over the answers provided so far by the U.S. government.
In a statement Wednesday, the government said Merkel called for U.S. authorities to clarify the extent of surveillance in Germany and to provide answers to "questions that the German government asked months ago."
Ahead of Germany's elections in September, which Merkel won, Germany's opposition accused her government of downplaying revelations of NSA spying - although at the time there was no suggestion the chancellor's phone was targeted.
On Wednesday, European lawmakers called for the suspension of an agreement that grants U.S. authorities access to bank data for terror-related investigations, a sharp rebuke of Washington's surveillance programs.
AP correspondent David Rising contributed to this report.