Scores of cheering Germans re-enacted the moment the wall came crashing down, toppling 1,000 graffiti-adorned 2.5metre-tall dominoes that tumbled along part of the route of the now vanished wall.
David Chater, Al Jazeera's correspondent at the scene, said: "It represents the way that the whole of the Iron Curtain suddenly was withdrawn all across Europe. It was a giant leap forward for democracy, right up to the border of Russia.
"Hundreds of thousands have gathered in the streets of the capital today, 20 years later. The streets of Berlin have been full of prime ministers and presidents just about tripping over themselves."
Barack Obama, the US president, sent a surprise video message to the event, introduced by Hillary Clinton, the secretary of state.
"Like so many Americans, I'll never forget the images of people tearing down the wall.
"There could be no clearer rebuke of tyranny, there could be no stronger affirmation of freedom," he said.
'Destined to fall'
Dmitry Medvedev, the Russian president, stressed the Soviet Union's role in bringing down the wall and suggested more must be done to clear "our Europe" of dividing lines, alluding to the differences and distrust that still set Russia apart from the West.
"This wall divided not only two countries but, as we realise today, all of Europe,'' Medvedev said.
Medvedev said the wall had been "destined to fall" amid reforms that had gained momentum in the communist Soviet Union and other countries in Eastern Europe, which was dominated by Moscow.
|Gorbachev and Merkel walked across the symbolic Bornholmer Bridge [Reuters]
"This event gave Europe freedom and progress and became a turning point for the fate of the world," he said.
Celebrations were held throughout Monday to commemorate the event that led to the reunification of Germany and paved the way for the collapse of the Soviet Union.
One of the highlights was when Merkel and Mikhail Gorbachev, the ex-Soviet leader, walked through the Bornholmer Strasse crossing - a former border where hundreds of East Germans rushed through 20 years ago.
Merkel, who grew up in East Germany and was one of thousands to cross that night, recalled that "before the joy of freedom came, many people suffered".
She told Gorbrachev, who is known for his role in pushing reform in the Soviet Union, that "we always knew that something had to happen there so that more could change here".
"You made this possible - you courageously let things happen, and that was much more than we could expect," she said.
Merkel was joined throughout the day by leaders from the European Union members and pivotal figures from the era that ushered in the collapse of communism in Eastern Europe.
They included Lech Walesa, who led anti-communist protests in Poland as the head of the Solidarity trade union, and former dissidents.
Memorials were held to the 136 people killed trying to cross the border, and a concert featuring performances from Bon Jovi and the Staats kapelle orchestra was held.
For some German residents, the 1990 reunification of the country remains a sore point.
On Saturday, several hundred left-wing demonstrators protested against the planned celebrations in Berlin.
A poll of more than 1,000 Germans carried out for the Leipziger Volkszeitung newspaper showed one in eight wanted the wall rebuilt - with the numbers nearly equal in the eastern and western parts of the now-unified country.
Shaken by the mass flight of its citizens into capitalist West Berlin, East Germany began erecting its "anti-fascist protection barrier" in the early hours of August 13, 1961.
According to a study published this year, at least 136 people were killed at the Berlin Wall between 1961 and 1989 while trying to escape.
However, thousands managed to evade the minefields, dogs and guards in watchtowers, using schemes including tunnels, aerial wires and hidden compartments in cars in order to make it to the West.