World War I broke out in 1914. It led to hunger in Berlin, and as a result in late 1916 about 150,000 people were subsisting on food aid. Revolutionary riots spread throughout the city. When the war ended in 1918, the communist Karl Liebknecht and the socialist Philip Scheidemann proclaimed Germany a republic. Emperor Wilhelm II abdicated. In 1920, Great Berlin was created under a municipal act, which united many villages, suburbs, and estates surrounding the city into a metropolis. In the wake of this expansion, Berlin had around 4 million inhabitants. In the 1920s, called the Golden Twenties, Berlin was a very fun and exciting city as the centre of art and culture.

After Germany lost the war, it had to pay severe war reparations. This was stipulated under the Treaty of Versailles. The government began to print so much money that Germany entered into a state of hyperinflation. The situation ameliorated after Germany made new political and economic arrangements.

One of the most visible results of all this was that the city's economy and cultural scene flourished. Painter George Grosz, writers Kurt Tucholsky and Arnold Zweig, and Albert Einstein helped transform the city into a European capital of culture. What is more, the railway system was electrified and the Tempelhof Airport was opened in the early 1920s. Berlin became the second largest inland port of Germany.