The New York-based magazine Metropolis released its 2016 ranking this week, placing above Finnish capital Helsinki in third.
It praised Berlin for its innovative approach to redesigning old, abandoned buildings to give them a purpose fit for the 21st Century.
"Berlin’s stellar pedigree of arts events such as CTM, transmediale, and the Berlin Biennale is taking on greater significance - and the spaces required to host them are becoming increasingly crucial," the magazine writes.
"If these new developments can cater to and integrate the wide range of newcomers to the German capital, it will resist the stasis and divisions that plague its European counterparts."
Metropolis gives particular credit to the Google-funded Factory Berlin, a converted brewery that is home to the offices of tech royalty such as Uber, Twitter and SoundCloud.
A project to redesign the Haus der Statistik, a GDR government building in the city centre, was also noted by the magazine as being a positive step towards preventing the capital’s drift into "normalcy".
Das Haus der Statistik. Photo: DPA
The proposed project would create a 130,000 metre space for artist studios, and living space for refugees in order to make up for the loss of over 600 artist studios in recent years, the magazine reports.
According to the magazine, Berlin is now in a position to take over London’s position as “the cultural capital of Europe” as the British capital has to deal with the consequences of the UK's vote to leave the EU.
In recent years, trendy international magazines have time and again poured praise on the German capital, ranking it high up among the world’s best cities.
In 2015, Monocle magazine ranked Berlin third behind Tokyo and Vienna for the world’s most liveable cities. Meanwhile a Mercer survey earlier this year put Berlin in the top 25 cities in the world for expats.
Despite the positive publicity and the huge increase in tourism which comes off the back of it, Berlin still continues to struggle with a multitude of social problems.
It has one of the highest unemployment rates in Germany, one of the highest levels of public debt, and the country’s worst-rated education system.