In This World, by British director Michael Winterbottom, beat 21 other contenders to win the Golden Bear award.
All three female stars of The Hours - Meryl Streep, Nicole Kidman and Julianne Moore - shared the Silver Bear award for best actress.
A Silver Bear went to Sam Rochwell for best actor as games guru Chuck Barris in Confessions of a Dangerous Mind - George Clooney's directional debut.
The prestigious festival - also called the Berlinale - featured more than 300 films from all over the world in a mix of Hollywood glamour and politics.
Beating prejudice
Migration and human trafficking were central themes in the 10-day event held under the motto "Towards Tolerance".
In This World - a documentary-style account - was one of three contenders at the festival focussing on the plight of asylum-seekers.
Click here to see the films in competition
The film, shot on a grainy off-balance digital camera, traces the flight to London of two Afghan refugees.
Mr Winterbottom - director of the acclaimed 1997 war film Welcome to Sarajevo - said he had been inspired to make the film by newspaper accounts of the nightmares faced by illegal immigrants.
"
In a way it's [the award] for all the other people in the world who face the choice of whether to stay in hardship or danger or to flee and try to make a new life elsewhere
"
He said he had been particularly disturbed by the story of 58 Chinese emigrants who suffocated in a truck at the port of Dover in the UK.
"People say: 'These people shouldn't be here, they should be sent home'... but even if people are economic migrants, what's wrong with that?" Mr Winterbottom said after last week's screening.
After receiving the award on Saturday, he said he was dedicating it to his two characters - picked from among a million refugees at the Peshawar camp in Pakistan.
"In a way it's for them as representatives of all those million people and for all the other people in the world who face the choice of whether to stay in hardship or danger or to flee and try to make a new life elsewhere," Mr Winterbottom said.
A seven-member voting panel led by Canadian director Atom Egoyan made the selection.
Movies competing for the Golden Bear included Steven Soderbergh's remake of the sci-fi film Solaris, featuring George Clooney, and Spike Jonze's Adaptation - starring Nicolas Cage and Meryl Streep - which was awarded A Silver Bear as overall runner-up.
The shortlist had an international flavour with films from Slovenia, Japan, Senegal, Australia and the Netherlands also on the list.
The Berlinale is regarded as the first major event of the year for the European film industry.
Last year the Golden Bear award was shared between Bloody Sunday, starring James Nesbitt, and Japanese film Spirited Away.
In 2001 it was won by the controversial French film Intimacy.
Here are the films that competed for the Golden Bear award:
Michael Winterbottom
Pascal Bonitzer's Petites Coupures (France)
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