Angela Merkel is telling Germans that their country is stronger than terrorism and the government will do everything to ensure "security in freedom".
In her annual televised New Year message being broadcast on Saturday, chancellor Mrs Merkel says 2016 has been "a year of severe tests", the toughest of them Islamic extremist terror.
But she adds, however, that she is "confident for Germany".
Twelve people were killed in a lorry attack on a Christmas market in Berlin on December 19.
The Islamic State group claimed responsibility for that rampage, as it did for two attacks in Bavaria in the summer in which the assailants, who, like the chief suspect in Berlin, came to Germany as asylum-seekers, were killed and 20 people injured.
"It is particularly bitter and sickening when terror attacks are committed by people who claim to seek protection in our country," Mrs Merkel, who has faced criticism for allowing large numbers of migrants into Germany in 2015, says in her address.
But "in going about our life and our work, we are telling the terrorists: you are murderers full of hatred but you will not determine how we live and want to live".
"We are free, considerate and open," she adds.
Germany is sending the same message in saying, in the face of pictures of the devastated Syrian city of Aleppo, "how important and right it was for our country to help those who really need our protection find their feet here and integrate", Mrs Merkel says.
Her country's democracy and values are the opposite of "the hate-filled world of terrorism, and they will be stronger than terrorism".
"We are stronger together. Our state is stronger. Our state is doing everything to guarantee its citizens security in freedom," she says.
She pledges that in 2017 the government will take action quickly "where political or legal changes are necessary".
Mrs Merkel is seeking a fourth term as chancellor in an election expected in September, and has already said that she expects her toughest campaign yet.
In her address she calls for "an open view of the world and self-confidence, in ourselves and our country" and attacks "distorted pictures" of the European Union and parliamentary democracy.
She acknowledges that Europe is slow and difficult and says it should concentrate on "what it really can do better than the national state".
"But, no, we Germans should never be deceived into thinking that a happy future could ever lie in going it alone nationally," Mrs Merkel adds.