"After my stepdaughter's death, I realised that I need time to come to terms with my grief," Bas said in a statement.
Bas, whose ministry oversees large parts of Germany's welfare system, also said she had faced increasing "public attacks", including from members of the CDU/CSU conservative bloc, the SPD's coalition partners.
Vice Chancellor and Finance Minister Lars Klingbeil, the SPD's other co-leader, said in a statement: "The attacks against her during the past days of her mourning were inappropriate. That is unacceptable."
Klingbeil's finance ministry said he would cancel a planned trip to India that had been scheduled to begin later on Monday.
Bas' departure adds to pressure on the coalition government led by Merz, which has been struggling in opinion polls and was shaken by regional election results last month that saw major gains for both the far right and far left.
The coalition partners have been working on changes to the nation's pay-as-you-go retirement system to address demographic challenges, a key element of a broader economic and social reform programme.
Bas had come under attack from lower ranks of the conservative party bloc over delays to the pension overhaul, which was intended to follow recommendations made by an expert commission.
Merz struck a conciliatory tone on X on Monday, saying Bas' decision deserved respect and thanking her for her commitment and their close cooperation.
The SPD said that Alexander Schweitzer, the former state premier of Rhineland-Palatinate and one of the party's deputy leaders, would take over as labour minister.
It remained unclear who would succeed Bas as the SPD's co-leader. Bas said she would retain her seat in parliament.
(Reporting by Andreas Rinke, additional reporting by Maria Martinez, writing by Thomas Seythal and Ludwig Burger, editing by Andrew Heavens and Ros Russell)

SPD party flag waves on the top of the Social Democratic Party's (SPD) headquarters, the Willy-Brandt-Haus in Berlin, Germany, 12 October 2026. Germany’s Labour Minister and SPD co-chair Baerbel Bas has resigned from both positions. EPA/FILIP SINGER
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