The process of coalition formation following the 2017 Bundestag election was the most difficult in German post-war history. For the first time Germany saw negotiations fail, a minority government being discussed as a real possibility, and the federal president involved as formateur in coalition politics. The aim of this contribution is to explain why government formation was so intricate after the 2017 election. To this end, we trace patterns of party politics and the development of the German party system since 2013. We then study general patterns of government formation at the regional and national levels since the 1990s and evaluate whether these have changed with the advent of the right-wing populist party, Alternative for Germany. Our analysis of the 2017–18 government formation process is based on a novel expert survey of the policy profiles of German parties on various issue dimensions, conducted in 2017. The results show that the continuation of the incumbent coalition government of Christian and Social Democrats was the most likely outcome, and that the Social Democrats were indeed able to enforce a surpassing share of their policy positions in the final negotiation rounds.