West Berlin was in an anomalous political position throughout the Cold War. West Berlin was a de facto part of West Germany (FRG), subject to Basic Law and its citizens held FRG passports, but was never an official part of the FRG. Instead, the city's division was a legacy of Allied wartime agreements which created a four-power division of Berlin Wartime Allied agreements, firmed up at the Yalta Conference, divided the capital city into four occupation zones (US, British, French, Soviet) governed by their respective military occupation authorities. As the Cold War began to take form in the first postwar years, the Western Allies held that the status of Berlin could only be hashed out with a proper peace treaty while the Soviets maintained that the Western Allies were violating preexisting agreements by countenancing a division of Germany into two separate states.

Broadly speaking, life in West Berlin fell into two historical phases. The first phase was one of uncertainty and confrontation that lasted roughly from 1948-1963. This was the period in which both the Soviets and the East Germans (GDR) tried to resolve the division of the city through very forceful diplomacy and sabre-rattling. The most infamous of these attempts was the Berlin Blockade in which the Soviets cut off the city from resupply, hedging that the Americans, UK, and French governments would not risk war over a vulnerable exclave. The American-led airlift led to the end of the blockade as it became clear the US was invested in West Berlin. The Soviets reopened the land and water routes into the city. West Berliners could use these routes to enter and exit the city, as well as the air corridors- this map shows the official routes available to West Berliners post-Blockade (as well as two others added later- but we'll get to that below). However, the transit routes were always subject to being cut off at anytime by either the Soviets or the GDR. Traveling through the land routes also meant West Berliners were subject to GDR passport controls. Transit by rail was the more common way to enter or exit the city, but rail traffic could not stop between the FRG and West Berlin. The various Berlin crises of the 1950s and 60s extracted a heavy psychological toll on West Berliners as it was never clear if this current crisis would lead to war.

Counter-intuitively, the erection of the Berlin Wall stabilized West Berlin's place in the Cold War. This marked the second phase of West Berlin's Cold War which lasted until 1989. The primary function of the Wall was not to keep West Berliners in, but rather to keep East Germans out of West Berlin. East Germans wanting to defect would merely have to cross into West Berlin because the FRG held that it was the sole provisional government of Germany until a final Allied peace treaty and all Germans could claim FRG citizenship. Division of the city made it easy for East Germans to cross over, unlike the increasingly patrolled inner-German border. The Wall stopped this outflow of East Germans and it did mark an end to Berlin's frontline status in the Cold War. The GDR would periodically claim that the city should be united, but such diplomatic claims lacked the sort of brinksmanship of earlier periods.

Detente and FRG Chancellor Willy Brandt's Ostpolitik did not resolve West Berlin's anomalous status, but it did lead to a greater normalization of the city's entry and egress. The GDR and the FRG came to agreements over increased auto traffic to the city and the GDR agreed to allow for the construction of two new autobahns between the FRG and the GDR. These highways were to be for FRG to West Berlin traffic only; gas stations, road services, and other highways amenities were hermetically sealed off from the rest of the GDR. An FRG driver could drive from Helmstedt to West Berlin after undergoing a border inspection, but could not exit into the GDR. There were both cynical and practical reasons for this type of travel arrangement. The GDR's ruling SED party had more or less recognized that the FRG was the more prosperous of the two Germanies and it did not want this wealth flaunted before its population. The SED also wanted to minimize the chances of outflight of more of its citizenry. But these political motives also had a practical bent to them as the GDR saw increased FRG road travel as a source of hard currency. The sputtering planned economy needed periodic injections of Western currency to underwrite foreign loans and FRG motorists buying gasoline from GDR gas stations was one small component of shoring up the finances of the GDR.

West Berlin itself declined somewhat during this period. Concurrent with this receding importance was a large outflow of industry and businesses within West Berlin during the 1950s and 60s. One other major incentive for residency in West Berlin during the Cold War were the favorable taxes and other economic incentives Bonn doled out to the city. This consisted of a whole panoply of subsidies and tax breaks given to both individuals and businesses. After the erection of the Wall in 1961, Bonn feared that FRG industry businesses would abandon the city and lead to an economic crisis in West Berlin. The Berlin aid package of 1962 allowed for substantial tax breaks to both individuals and corporations such as writing off up to 75 percent of construction costs for new buildings, new rent-controlled housing, up to a 30 percent reduction in income tax. Federal employees in the city enjoyed an additional bonus on the top of their regular salary and the state also underwrote low cost loans for West Berlin for economic investments. West Berliners called these tax breaks the Zitterpraemie (jitters premiums) for living in this urban exclave and they were designed to be a proactive measure to prevent people from migrating out of the city. To that extent, these measures worked, but at considerable cost to the state. But this economic aid did not stem the outflow of industry to West Berlin in the 1960s and 70s and the economy of the city shifted to public services and service industries. By the mid-80s, Bonn directly subsidized much of the city's municipal services and the city cost the FRG around 8 billion DM in tax breaks and other incentives.

The result of this was that the city's demographics shifted quite markedly over the course of the Cold War. One of the curious phenomena was that the city's German population became both older and younger. Many of the upwardly mobile youth of the city's population in the 1950s moved to the more prosperous FRG, leaving an aging German cohort of natives within the city. Meanwhile, FRG youths moved to West Berlin. One of the reasons for living in West Berlin for FRG youth was that residents of West Berlin were exempt from the draft or alternative service. Flights to West Berlin became more common during the highly contentious politics of the 1960s and 70s. The Free University of West Berlin also attracted a number of radical-minded youth, who were disappointed that it fell into the problems typical of a German university (strict hierarchies, overcrowding), but fed into the West Berlin's radical youth culture of this era. West Berlin also became one of the epicenters of the student movement of the late 1960s with figures like Rudi Dutschke gaining prominence in the FRG's New Left. These factors were one of the attractants for FRG youth to live in a divided city. Additionally, the outflow of natives as well as various state subsidies meant that rents in West Berlin were quite cheap. Squatting in vacant buildings was also quite common, but for FRG youth, they could live in far larger spaces for much less than they could in Frankfurt am Main or Hamburg.