The two leaders are to discuss migration, trade and EU's long-term budget, the Swedish government said. They will then hold a joint press conference in Bundeskanzleramt, the office of the Chancellor of Germany.
Merkel was on Wednesday elected to a fourth term as German Chancellor by the Bundestag.
After the meeting with Löfven, she will head to Paris to continue discussing EU reforms with French President Emmanuel Macron ahead of a March 22nd-23rd summit.
Her incoming coalition has broadly welcomed Macron's bold reform plans, while Social Democrat leader Löfven has expressed concerns about the pace and scope of extensive reforms.
Trade is likely to feature heavily on the agenda on Friday. Both Merkel and Löfven have criticized US President Donald Trump's trade war threats and tariffs on imported steel and aluminium.
“I think it's better for the EU and USA to find some way to cooperate in order to deal with the situation,” Löfven told reporters after meeting Trump in the White House last week.
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Sweden is likely to attempt to strengthen its ties with Germany when Britain, one of its other close EU friends, leaves the union.
“I value Angela Merkel, her leadership and friendship. We share fundamental values, and Germany plays a major role in the growth of the EU and the world,” said Löfven at a press conference, attended by The Local, when Merkel visited Stockholm last year.