Victors: Mayor Klaus Wowereit celebrates with Schroeder
Elections in the city confirmed the Social Democrats' (SPD) Klaus Wowereit as mayor, but the party failed to win enough votes for a clear majority.
The ex-communists, the Party of Democratic Socialism (PDS) polled nearly 23% - their strongest showing since reunification - while support for the right-wing Christian Democrats plummeted from 40% to under 24%.
Not only have the PDS never apologised for building the Berlin Wall, they are now opposed to the military campaign in Afghanistan.
Mr Schroeder's hint that the PDS might not find favour came as he referred to an opinion poll, which suggested that most Social Democrat supporters would favour a so-called traffic light coalition - with the Social Democrats, Greens and liberal Free Democrats (FDP) forming a red-green-yellow formation.
"More than three quarters of SPD voters and sympathisers have expressed their preference. This must be taken into consideration," Mr Schroeder said.
Mr Wowereit told reporters he would hold talks first with the Greens, then the FDP and then the ex-communists.
Some analysts are describing the election result as a "political earthquake" for the city.
Preliminary results showed the left-of-centre SPD increasing its share of the vote to nearly 30%. The Greens - its coalition partners in the federal government - got just over 9%.
The former East German communists, the PDS, appeared to have achieved their best result since reunification, with nearly 23%.
The conservative Christian Democrats, tainted by allegations of sleaze both locally and nationally, saw their support plummet from 40% to under 24% - barely ahead of the ex-communists.
Their mayoral candidate Frank Steffel took the blame for what he described as a "painful defeat".
Coalition partners
BBC Berlin correspondent Rob Broomby said it was not clear which partners Mr Wowereit would choose for government.
But our correspondent says the support of any of the parties would come at a price.
PDS candidate Gregor Gysi says he is ready to govern in a "red-red" coalition, but the idea has shocked victims of the old communist regime.
He said the party had "come further than people thought we could".
Its objections to US military action in Afghanistan proved not to be a vote-loser as expected, but may have bolstered its position in its traditional stronghold in the east.
CDU collapse
Mr Wowereit has governed the city since the collapse of the old grand coalition of both Christian and Social Democrats in June.
The old CDU-led coalition governed the city from 1991 until it was brought down by a multi-million dollar debt burden.
The SPD appears to have benefited from an increasingly bitter and personal campaign.
First, Mr Wowereit announced he was gay, which in such an open-minded city may have helped his profile.
An attempt by Mr Steffel to capitalise on his heterosexuality, however, in a poster showing his photogenic wife, did not help him. Neither did telling Berliners his favourite city was Munich.