She spoke as Germany celebrated the milestone on November 9, 1989, that ended its Cold War division by throwing a huge open-air party at Berlin's iconic Brandenburg Gate.
More than a million people were expected in the reunited capital, many flocking to see rock stars and anti-communist dissidents on stage amid fireworks to recall the peaceful breach of the despised barrier.
Merkel, 60, who grew up in the East, said: "The Berlin Wall, this symbol of state abuse cast in concrete, took millions of people to the limits of what is tolerable, and all too many beyond it. It broke them."
"Little wonder that after the border opened, people took apart the hated structure with hammers and chisels."
In an unusually emotional speech at a memorial for Wall victims, Merkel said: "We can change things for the better -- that is the message of the fall of the Berlin Wall."
This is true for Germany and "for the people in Ukraine, Syria, Iraq and in many, many other regions of the world where liberty and human rights are threatened or being trampled," she said.
Merkel said the events inspired hope that the world can tear down "walls of dictatorship, violence, ideology and hostility".
"Too good to be true? A daydream that will burst like a bubble? No, the fall of the Wall has shown us that dreams can come true."
'No Shot was Fired'
The ugly scar the Wall once cut through Berlin has been marked by an art installation, a string of nearly 7,000 illuminated white balloons tethered along a 15-kilometer (9 mile) stretch of its former 155-kilometer path.
To symbolize the tumultuous day the barrier first cracked open, the balloons will float into the sky in the evening to the stirring strains of Beethoven's "Ode to Joy", the anthem of the European Union.
Later the unofficial Wall anthem "Heroes", which David Bowie recorded in a studio near the barrier in then-West Berlin, will be performed by British singer-songwriter Peter Gabriel.
The celebrations started on a sombre note with a church service and ceremonies for the at least 389 victims of the border, who were shot, blown up by mines or otherwise killed as they tried to escape the East.
"It was wonderful, obviously, wonderful, but at the same time, strange," said medical researcher Uschi, 50, about the night when citizens from both sides found the courage to cross into the heavily guarded no-man's land.
"The police were very hesitant. It's a miracle that no shot was fired."
People's Celebration
Unlike for the 20th anniversary, when foreign heads of state and government flocked to Berlin, this time the festivities are mainly a people's celebration in a city that has blossomed into a cultural hub and major European tourist destination.
More than a million people were expected to descend on Berlin over the weekend, said tourism group Visit Berlin.
Entertainment will range from the Berlin State Orchestra under the baton of Daniel Barenboim to performances by East German rock band Silly and techno musician Paul Kalkbrenner.
Also on stage will be veteran German rock singer Udo Lindenberg, whose 1983 hit "Sonderzug nach Pankow" (Special Train to Pankow) mocked East German leader Erich Honecker for denying him permission to perform.
The only foreign dignitaries are veterans of the era, chiefly the last Soviet leader, Mikhail Gorbachev, 83, whose "glasnost" and "perestroika" reforms kicked off the series of historic events.
Read more at Discovery News
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