The 52-year-old German was found earlier this month by someone out for a walk near the village of Bolligen, living in a frail makeshift tent, Bern cantonal police said in a statement.
She was reported to be in a good physical state and appeared to have been living in the woods for nearly a year. The woman, who was not named, went missing in February 1997 in Brandenburg, which surrounds Berlin.
Police said she did not give an explanation of why she was there or why she left home without letting her relatives know. But she appeared to have roamed between France, Italy and Switzerland.
The mayor of Bolligen, Rudolf Burger, told the Swiss news agency ATS that she appeared to be slightly obsessive and spoke of a "mission." However, she has not committed any offence and police said she could stay for the time being.
Bernese authorities, which own the wood, have asked her to leave soon and local social services were ready to find an alternative arrangement provided she agrees.