This year's 60th anniversary has given the Berlinale a chance to look back at the scandals and controversy that established the event as Europe's most politically charged cinema showcase.
"The festival was founded as the Cold War was raging," festival director Dieter Kosslick said this month. "Berlin had been reduced to rubble and ashes but was a powerful symbol for the West."
When the Berlinale was first held in 1951, some two million West Germans were unemployed and tens of thousands of homeless Berliners still lived in makeshift camps, according to new book "The Berlinale - The Festival" by British film historian Peter Cowie.
US officials saw an international film festival as an opportunity to indoctrinate Germans, who still had fresh memories of the Nazis and their powerful propaganda machine, and create a "showcase for the free world," Cowie writes in the book.
The aim was also to establish a cultural beachhead in West Berlin, where the divided city marked the front line of the conflict with the Soviets.
In the early years, some 500 festival posters were hung in West Berlin so they could be seen in the East, Cowie writes.
The first film was Alfred Hitchcock's "Rebecca," a film that had already been released in 1940, but was screened because the Germans had been deprived of it until after the war.
With an influx of glamorous Hollywood fare, it only took five years for the Berlinale to acquire top billing from the International Federation of Film Producers' Associations, putting it in the same class as Cannes and Venice.
The first several festivals saw US and British films take home the top prizes, though.
"It was not until 1958 that a jury accorded top honours to a European film - and one destined to become an all-time classic - Ingmar Bergman's 'Wild Strawberries'," Cowie writes.
Eventually the German hosts dared to assert their independence from their American patrons, often with explosive results.
In 1970, German director Michael Verhoeven unveiled "O.K.", a film about a Vietnamese girl who is raped and shot by four US soldiers.
Festival director Alfred Bauer told the jury days before the screening that they would see a "fantastic new German film." But when American director and Berlinale jury President George Stevens finally watched the picture, the Hollywood legend behind "Woman of the Year" and "A Place in the Sun" threatened to quit unless it was excluded from the competition.
Stevens had served in the US Army Signal Corps and had filmed not only the Normandy landings but also the liberation of the Dachau concentration camp. He found it shameless of the Germans to accuse GIs of war crimes.
The entire jury eventually resigned without bestowing any prizes.
Then in 1979, the harrowing US drama "The Deer Hunter," about a group of Russian-American soldiers fighting in the Vietnam War, sparked an even deeper rift.
The Soviet delegation, including representatives from across Eastern Europe and two members of the jury, walked out of the festival over what they called an insulting depiction of the Vietnamese in the picture. Their statement sparked a landslide that included Cubans, East Germans, Bulgarians, Poles and Czechoslovakians all walking out.
Cowie says world powers used the Berlinale to score diplomatic points over events going on half a world away.
"China had invaded part of Vietnam and Hanoi was desperate for help, for arms, and for troops from the Socialist countries," he says. "(Those countries) had to find a way to show solidarity without getting militarily involved."
The Russians, like so many before and after, chose the Berlinale to make their point.
"The Deer Hunter," now considered among the world's greatest films, will be screened as part of an anniversary retrospective this year.