In 1539, the electors officially converted to Lutheranism. One year later the imperial elector Joachim II introduced the Protestant Reformation in Brandenburg. He imposed secularization and confiscated the church's possessions. With this money he implemented large-scale projects like the construction of Kurfurstendamm Avenue, which extended from Berlin City Palace to his hunting castle, Grunewald.

In 1576, Berlin was hit hard by the bubonic plague, which claimed around 4,000 lives. By the early 17th Century, Berlin-Cölln had a population of 12,000. However, the Thirty Years' War, had a disastrous effect on the city. Berlin lost half of its inhabitants, not to mention the numerous houses that were damaged or destroyed.

The Great Elector Frederick William was appointed regent of Brandenburg in 1640. He promoted religious tolerance and immigration. During the next few years the city's territory stretched into the new suburbs of Dorotheenstadt and Friedrichswerder. What's more, under Frederick William Berlin's population rose to 20,000, and for the first time the city gained recognition throughout the continent. Many immigrants came from France, Poland, Bohemia, and Salzburg. Another development in the 17th Century was the famous Unter den Linden Boulevard. In 1647, it was ready and in place between the Palace and the Tiergarten.

In 1701, Friedrich III acceded to the throne as Friedrich I, King in (not of) Prussia. He took this title because he did not control all of Prussia. He commissioned the Charlottenburg Castle in West Berlin, and made the city the Prussian capital. In addition, the cities of Friedrichstadt, Dorotheenstadt, Friedrichswerder, Cölln, and Berlin were united under the Royal Capital and Residence of Berlin in 1710. His successor, Friedrich Wilhelm I transformed Prussia into a major military power. In 1709, 5,000 of the city's 55,000 inhabitants served in the army.

Later on, in 1740 Frederick II came to power. This ruler is known to history as Frederick the Great, especially since it was he who brought the Enlightenment to the city. As a result, academic and cultural life flourished under his rule. Berlin became a meeting place of great thinkers such as the philosopher Moses Mendelssohn. Unfortunately, along with Frederick's successor, stagnation followed, as the next ruler (Frederick William II) was in favor of repressive measures and censorship. His main achievement was the reconstruction of the city wall. He also ordered the improvement of the Brandenburg Gate in the late 18th Century – a world-famous symbol of the city. Today this gate is featured on Euro coins.