Mr Hofer, of the populist anti-immigration Freedom Party of Austria, made his call in a televised debate with former Austrian Green Party leader Alexander Van der Bellen.
He advocated closer ties with Eastern European countries and said it was important to cultivate a better relationship with Moscow.
Mr Hofer accused Mrs Merkel of introducing a failing refugee policy.
He said: “She inflicted considerable damage on Europe when she opened the borders to refugees and that as a result hundreds of thousands of refugees – including ‘terrorists’ – have moved through Austria.”
But he rejected the idea of leaving the European Union (EU) saying he would rather concentrate on the positive development of the bloc.
Veteran politician Mr Van der Bellen accused his debate rival of playing around with the idea of an ‘Auxit’ saying mere speculation fuelled right-wing populism in Europe.
He called for solidarity between EU member states and stressed the importance of a good relationship between Austria and Germany.
Mr Van der Bellen and Mr Hofer are facing off in a second-time election after a court ordered a re-run after irregularities in postal voting.
The new ballot was originally scheduled for October 2 but was postponed again to December 4 after adhesive seals on postal votes were found to have come unstuck.
Mr Van der Bellen beat Mr Hofer in the second round by just 31,000 votes but those elections were annulled by the court after Mr Hofer complained about anomalies in the counting of postal votes.