Preliminary results suggest a huge surge in support for the AfD, putting it in third place after Germany's two biggest parties, Chancellor Angela Merkel's center-right Christian Democratic Union and the center-left Social Democratic Party .
The AfD, which was set up only four years ago, will become the first far-right party to enter the Bundestag since 1961.
Seen by many as a fledgling young party from the radical right, the AfD won just 4.7% of the vote in the last federal elections in 2013. This time around it took about 12.6%, according to preliminary official results.
They'll likely be on the political fringes
Following the exit polls, the SPD -- Merkel's coalition partner for the past four years -- immediately announced it would not join the next government and would instead go into opposition.
The party -- which saw its share of the vote decrease by more than 5% compared to 2013 -- said their poor showing indicated they had not received a mandate from the people to govern.
But the move also blocks the AfD from taking a more central opposition position in parliament, and instead looks to consign them to the political fringes of parliament.
They brought new voters to the polls
Nearly half of voters turned away from the country's two largest parties. The AfD also picked up nearly 700,000 ballots from people who were previously non-voters.
Julian Reichelt, editor-in-chief of Bild.de, told CNN the reason so many voters turned to the far right is because Merkel hasn't "been addressing many issues that people care about."
AfD voters "sent a dramatic message that many people are fed up with how politics is done," he said.
Merkel alluded to this on Sunday evening, saying that she would listen to those voters who had chosen the AfD instead.
"We will clearly analyze it, and we wish to get the voters back in order to deal with good policy and also to take away their anxieties," the Chancellor said.
They did better in the east than in the west
Merkel's failure to respond to voter concerns has seen the far right swoop in and scoop up votes from Germans preoccupied by issues of migration, security and national identity. The largest share of votes for the AfD came from eastern Germany, according to preliminary data from the political polling firm Infratest Dimap.
Some 21.5% of voters in the east voted for the far-right party, while 11% voted for the AfD in the west, according to Infratest Dimap.
Georg Pazderski, the leader of the AfD in Berlin, told CNN that the exit polls showed a "political earthquake" had taken place in the country.
"For the first time, we have a conservative party right beside our Christian Democrats and this is because they moved more and more to the left and we moved into the vacuum," Pazderski said.
Jasna Zajcek, an expert on rise of the far right in eastern Germany, said one of the reasons the AfD performed better than expected was that many voters in the east do not feel integrated into modern Germany.
She said these voters feel they still suffer from the loss of the more socialist state system that the former East Germany once provided.
Those voters don't understand why economic benefits are "thrown" at migrants while they suffer with high unemployment, small pensions and drug and alcohol problems, Zajcek added.