After the 1996 elections, in which Meretz lost a quarter of its seats, Aloni lost internal leadership elections to Yossi Sarid and retired. In 1997, the three parties officially merged into a single entity, though part of Shinui (under the leadership of Avraham Poraz) broke away to form a separate movement. Later in the Knesset session, David Zucker also left the party to sit as an independent MK.
On 22 October 2002, Meretz MK Uzi Even made history by becoming the first openly gay Member of Knesset, after Amnon Rubinstein retired. This created a vacancy and Even was next on the Meretz list. His term lasted less than three months, however, as the Knesset was dissolved in January 2003. Even's entry to the Knesset was met by mixed reactions from the ultra-Orthodox parties; Shas's Nissim Ze'ev was the harshest, saying Even "symbolized the bestialization of humanity", adding that he should be "hidden under the carpet" and banned from entering the Knesset.
For the 2003 elections, Meretz were joined by Roman Bronfman's Democratic Choice. However, the party shrank in representation again, this time to just six seats. Sarid immediately took responsibility and resigned from leadership, though he did not retire from the Knesset and continued serving as an MK, before stepping down prior to the 2006 elections.
In December 2003, Meretz was disbanded, in order to merge with Yossi Beilin's non-parliamentary Shahar (שח"ר) movement. The original name suggested for the new party was Ya'ad (יעד, Goal), but was not used because it sounded like the Russian word for poison ("yad"), and it was feared that it might alienate Israel's one million Russian-speaking voters (although there had been two parties previously in Israel using the name – Ya'ad and Ya'ad – Civil Rights Movement, the latter ironically a forerunner of Meretz, they both existed before large-scale immigration from the Soviet Union). Instead, the name Yachad (Hebrew: יח"ד) was chosen. As well as meaning "Together", it is also a Hebrew acronym for Social-Democratic Israel (Hebrew: ישראל חברתית דמוקרטית, Yisrael Hevratit Demokratit).
The new party was established in order to unite and resuscitate the Israeli Zionist peace camp, which had been soundly defeated in the 2003 elections (dropping from 56 Knesset members in 1992 to 24 in 2003) following the Al-Aqsa Intifada. The party's purpose was to unite a variety of dovish Zionist movements with the dovish wing of the Labor Party. However, the efforts were largely unsuccessful as, except for the original Meretz, Shahar and Democratic Choice, no other movement joined the new party. It has suffered from declining popular interest in left-wing peace movements, as a result of the rise in Palestinian violence, and only 20,000 people are now registered members of the party, half the number who were prior to the 1999 party primaries.
In March 2004, Yossi Beilin was elected party leader, beating Ran Cohen, and started a two-year term as the first chairman of Yachad. In July 2005, the party decided to change its name to Meretz-Yachad, because opinion polls revealed that the name Yachad was not recognisable to the Israeli public and that they preferred the old name Meretz. The chairman Beilin opposed the motion to revert the name to Meretz and a compromise between the old and new names, Meretz-Yachad, was agreed upon.
However, in the 2006 election campaign, the party dropped the Yachad part of its name, running as just Meretz, under the slogan "Meretz on the left, the Human in the centre". Nevertheless, it failed to stop the party's decline, as they won just five seats. In 2007, Tsvia Greenfeld, sixth on the party list, became the first-ever female ultra-Orthodox Knesset member, following Yossi Beilin's decision to retire from politics.
In March 2008, internal elections for the chairman of the party were held. At an early stage, Yossi Beilin, Zehava Gal-On and Ran Cohen announced their bids. After Haim Oron announced his bid in December 2007, Beilin withdrew his bid and announced his support for him. Oron went on to win the internal elections held on 18 March 2008 with 54.5% of the vote, beating Ran Cohen (27.1%) and Zehava Gal-On (18.1%) to become Meretz's new chairman.
Meretz balloon flying at the Rabin memorial rally in Rabin Square, 1 November 2014
The joint Meretz–Hatnua HaHadasha list ended up winning only 3 seats in the election. This electoral loss was largely attributed to traditionally left-wing voters choosing to strategically vote for Kadima, in an effort to get Tzipi Livni to head the next government, instead of Benjamin Netanyahu of Likud.
Following the party's failure in the 2009 legislative elections, some of the party members called for the resignation of the party chairman Haim Oron and to give way for Zehava Gal-On. Haim Oron indeed left the Knesset on 23 March 2011 and later left the chairmanship of the party. As a result, MKs Zehava Gal-On, Ilan Gilon, and youth activist Ori Ophir began campaigning to win the position of the party chairman. The primaries were held on 7 February 2012 for the position of the party's chairman; Gal-On was elected as the chairman with 60.6% of the votes, whilst Ilan Gilon was second with 36.6%, and Uri Ofir was third with 2.8%.
In 2015, as preliminary results of the Knesset elections indicated that the party representation would be reduced, Zehava Gal-On announced that she would resign as chairperson of Meretz as soon as a successor was chosen, and from the Knesset, in order to open a place for Tamar Zandberg, the party's fifth place-candidate who appeared to have lost her seat. Zandberg, Ilan Gilon, and others urged Gal-On to reconsider her decision. However, once absentee and soldier ballots were counted, Meretz gained a fifth seat, negating the premise for Gal-On's earlier announcement, and she announced that she would continue as party leader, saying: "Meretz received a fifth seat from young supporters, from Israeli soldiers, who raised the party's rate of support. That allowed Meretz to maintain its strength in terms of the number of voters – some 170,000 – compared with the last election. Under the circumstances, and against all odds, that is a success."
In February 2019, Meretz held its first-ever open primary contest. Eighty-six percent of party members cast votes. Ilan Gilon won first place; he will be placed second on the party's Knesset slate, behind party leader Tamar Zandberg. Michal Rozin came in second place, followed by Issawi Frej and Ali Shalalha.