The 28-year-old Kenyan, who raced a shoulder-to-shoulder battle against Merga after the 27 kilometre point, put on a spurt after passing the 38 kilometre mark to cross the finishing line in two hours six minutes 13 seconds.
Merga was second in 2:09:13, followed by Japan's Hiroyuki Horibata, who timed 2:09:25 to qualify for the world championships in August.
"I felt good from the last three kilometres. I spurted because I felt the time was a bit slow," said Kipsang, who won the Frankfurt marathon last season with a personal best of 2:04:57.
"It was a very strong battle (against Merga), but I believed in myself that I'm strong. I really enjoyed it, because the battle increased the pace."
A group of more than 20 runners were led by three Kenyan pace-setters - Nicholas Chelimo, Patrick Nthiwa and Samuel Ndungu - up to the 24 kilometre point.
Five runners, including Kipsang and Merga, took the lead afterwards, but the second group soon caught up with them.
Merga ran out of patience with the slow pace and broke away after 27 kilometres and only Kipsang followed him, ahead of Yared Asmerom of Eritrea and Moses Kangogo of Kenya.
Top ten of the Lake Biwa marathon:
1. Wilson Kipsang (KEN) 2hr 06min 13sec
2. Deriba Merga (ETH) 2:09:13
3. Hiroyuki Horibata (JPN) 2:09:25
4. Kentaro Nakamoto (JPN) 2:09:31
5. Moses Kangogo (KEN) 2:09:48
6. Masato Imai (JPN) 2:10:41
7. Satoshi Yoshii (JPN) 2:10:45
8. Satoru Kasuya (JPN) 2:11:17
9. Masashi Hayashi (JPN) 2:11:19
10. Koji Gokaya (JPN) 2:12:07