The singer is in the German capital on what his representatives said was a private visit, although he is reported to be receiving a lifetime achievement honour at an awards ceremony on Thursday.
About 200 fans gathered at the entrance to the Adlon Hotel, near the Brandenburg Gate, as Jackson's motorcade arrived.
The reclusive performer had to fight his way through the crowd of fans to get into the hotel, in a scrum that injured one person.
Later, Jackson dangled a baby out of the window of his room on the fifth floor, holding it with one arm around its neck.
Many onlookers feared the 44-year-old would drop the infant, although he brought the child back inside safely.
A spokesperson for the company organising the award ceremony said Jackson was with his children.
As fans cheered for him to appear again, Jackson came out onto the balcony covering his face and threw a towel down to the crowd below.
Jackson has two children of his own, Prince Michael, who is five, and Paris, who is four.
US news reports said in August that the 44-year-old had become a father again - but it was unclear whether the boy, then six months old, was adopted or his own biological offspring.
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