Angela Merkel has stressed that the UK must formally announce its intention to leave the EU before Brexit talks can begin.
However, the Chancellor said the "close bonds of partnership and friendship" between Germany and the UK remain intact despite the vote to leave the European Union.
Mrs Merkel said it was in everyone's interest for the UK to have a clear view on the type of relationship it wants with the trading bloc before Article 50 is invoked and formal Brexit talks commence.
During a joint news conference in Berlin, Mrs May confirmed her Government was taking time to determine its objectives before the two years of negotiations is triggered - and this will not be before the end of 2016.
Angela Merkel rolled out the red carpet for Theresa May in Berlin
In response, the German Chancellor warned no one wants a period of limbo before Article 50 is activated.
The Prime Minister stressed that she wanted the UK's departure to be orderly and constructive, and expressed hope that the country would secure the "closest relationship" with Germany after Brexit.
Mrs May said she believed the referendum result was an indication that Britons wanted greater control over immigration, while retaining a good trade deal with Europe.
The PM told reporters that she defined "sustainable" levels of net migration as in the tens of thousands - considerably less than the hundreds of thousands of people currently coming to the UK each year.
This is Mrs May's first overseas trip as PM - and the red carpet was rolled out for her arrival in the German capital, with a military band playing the UK's national anthem
Sky's Sophy Ridge, in Berlin, said: "It was interesting just how warm the welcome was that Angela Merkel put on for the Prime Minister. Both women know just how important their relationship is going to be for both the UK and Germany."
The pair are set to have a working dinner on Wednesday night, with Mrs May travelling on to Paris to meet French President Francois Hollande on Thursday.
In addition to discussing the EU, Mrs May and Mr Hollande are expected to discuss co-operating on counter-terrorism measures in the wake of last week's terror attack in Nice.
The trip abroad came after Mrs May received widespread acclaim for her performance against Jeremy Corbyn at her first Prime Minister's Questions.
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