The 1989–90 season was tumultuous for BFC Dynamo. The East German regime faltered and parts of the Berlin Wall were opened on 9 November 1989. Forward Andreas Thom became the first player in the DDR-Oberliga to leave for the West German Bundesliga. The dismantling of the champion team from the 1980s was now well underway. The Stasi was dissolved and the club thus lost a major sponsor. The East German Ministry of the Interior declared that it was only prepared to support the club until the end of the 1989–90 season. The club changed its name to FC Berlin on 19 February 1990, in an attempt to distance the club from the Stasi. The number of spectators dropped drastically. FC Berlin finished the 1989-90 DDR-Oberliga in fourth place and failed for the first time to qualify for a European competition. Also Thomas Doll, Frank Rohde and Rainer Ernst left for the Bundesliga after the season.
FC Berlin got off to a poor start in the 1990-91 NOFV-Oberliga, and Jürgen Bogs returned as coach. FC Berlin fans created one of the biggest hooligan scenes in East Germany, and an 18-year-old supporter, Mike Polley, was shot dead by police during riots in Leutzsch in connection with a match against FC Sachsen Leipzig on 3 November 1990. The team finished the 1990-91 NOFV-Oberliga in 11th place, but qualified for the play-off for the 2. Bundesliga. FC Berlin narrowly missed promotion to the 2. Bundesliga. A large number of players left the club after the season, including Heiko Bonan, Burkhard Reich, Waldemar Ksienzyk, and Hendrik Herzog. FC Berlin participated for the first time in the DFB-Pokal in the 1991-92 season. The team dominated the 1991-92 NOFV-Oberliga, but would once again fail to qualify for the 2. Bundesliga. More players left the team, including Christian Backs and Jörn Lenz. FC Berlin would lose two complete teams during the first one or two years after the fall of the Berlin Wall.
FC Berlin had to continue at the amateur level. The competitors in the league now consisted of teams such as Tennis Borussia Berlin, Eisenhüttenstädter FC Stahl, and BSV Stahl Brandenburg. FC Berlin had to rely on its youth department to supply the team with new players. The club qualified for the 1994–95 Regionalliga Nordost. The re-instated Regionalliga now constituted the new third level. The Regionalliga Nordost meant new meetings with well known opponents such as 1. FC Union Berlin and FC Carl Zeiss Jena. FC Berlin struggled in the Regionalliga Nordost, but managed to retain its place in the league. The 1995–96 Regionalliga Nordost would also mean meetings with the old rival 1. FC Dynamo Dresden. Werner Voigt became the new coach at the end of autumn 1995. He had a long history with BFC Dynamo.
The millions the club had earned on player transfers in the early 1990s had been used up by the mid-1990s. Club President Volkmar Wanski had to support the club with annual personal contributions. The successes in the Regionalliga Nordost did not materialize, and Voigt and FC Berlin eventually agreed to part ways. Central players in the team during 1998–99 season were Heiko Brestrich, Davor Krznarić, Jörn Lenz, Ayhan Gezen, Mario Kallnik, Mario Maek and Timo Lesch. The club decided to take back its old club name of BFC Dynamo at the general meeting on 8 May 1999. BFC Dynamo then won the 1998-99 Berlin Cup and thus captured its first Berlin Cup title.
BFC Dynamo continued to have financial difficulties, as it did not have enough sponsors. The number of spectators was also low and new sponsors were deterred by hooliganism. Jürgen Bogs returned for his third stint as coach at the end of 1999. The club finally got a promising main sponsor in the form of software company Lipro AG in early 2000. However, the difficulties in the league continued and the club's liabilities started to become significant. BFC Dynamo finished the 1999–2000 Regonalliga Nordost in 17th place and was relegated to the NOFV-Oberliga Nord. The club made an attempt to win promotion back to the Regionalliga Nord. BFC Dynamo dominated the 2000–01 NOFV-Oberliga Nord. The team had lost only three matches during the league season, and striker Denis Kozlov had scored a whopping 29 goals in the league. BFC Dynamo would face 1. FC Magdeburg of the NOFV-Oberliga Süd in the play-off for the Regionalliga Nord. However, it was clear even before the first meeting that the club had major financial problems. BFC Dynamo lost the play-off and the club's total debts were now estimated at several millions of Deutsche Mark.
The insurance company AOK applied for insolvency against BFC Dynamo on 21 June 2001, and the club was thrown into a financial crisis. Supporters started a fundraiser and organized a demonstration to save the club. Also, former players from the 1980s, such as Hans-Jürgen Riediger and Rainer Troppa, intended to participate in the demonstration. Insolvency proceedings were opened on 1 November 2001. The club was thus automatically relegated to Verbandsliga Berlin. The total debts were estimated at up to 7 millions Deutsche Mark. The entire presidium resigned and an emergency board was appointed. Two of the members of the emergency board were André Sommer and Rayk Bernt. Sommer and Bernt were longtime supporters, but controversial due to their connection to the Hells Angels.
The Sommer and Bernt presidium was eventually overthrown by supporters and the former coach of the women's team Volkmar Lucius, after an application to the Charlottenburg District Court. Entrepreneur Mike Peters became club president on 31 May 2002. The preferential claims seemed insurmountable, but supporters had received several waivers from creditors and had also collected thousands of Euro. The new presidium around Peters made a major financial contribution to the insolvency plan. Peters would also finance a large part of the budget for the 2002-03 Verbandsliga Berlin. The team finished its first season in the Verbandsliga Berlin in third place. BFC Dynamo then finished the 2003-04 Verbandsliga Berlin in first place and finally won promotion back to the NOFV-Oberliga Nord. The team had won all 17 matches in the second half of the season, which was a new record in the Verbandsliga Berlin. The insolvency proceedings finally came to a positive conclusion and were closed on 16 June 2004.
FC Berlin and decline (1989–1994)
The Peaceful Revolution (1989–1990)
A FIFA resolution for a more consistent distinction between amateurs and contract players prompted a radical reform to professionalize East German top-flight football. East German football players had until then officially been amateurs. The reserve teams of the designated football clubs (FC) were also disbanded and their players were distributed between DDR-Liga teams. The place of BFC Dynamo II in the DDR-Liga was taken over by BSG Bergmann-Borsig.
Striker Frank Pastor, who had been the league top goalscorer in the 1986-87 DDR-Oberliga, was transferred to BSG Aktivist Schwarze Pumpe at the beginning of the tumultuous 1989–90 season. On 1 September 1989, the third matchday, BFC Dynamo defeated 1. FC Magdeburg 2–1 in front of 11,500 spectators at the Friedrich-Ludwig-Jahn-Sportpark. Heiko Bonan and Andreas Thom scored one goal each. As winners of the 1988–89 FDGB-Pokal, BFC Dynamo qualified for the 1989-90 UEFA Cup Winners' Cup. The team defeated Valur in the first round, and was drawn against AS Monaco in the second round. AS Monaco was coached by Arsène Wenger at the time. The first leg ended 0–0 at the Stade Louis II on 17 October 1989. Defender Marco Köller was injured in the match against F.C. Hansa Rostock on the eighth matchday on 21 October 1989 and then chose to defect to West Germany with his girlfriend. The return leg against AS Monaco was played at the Friedrich-Ludwig-Jahn-Sportpark on 1 November 1989. The match ended 2-2 and BFC Dynamo was eliminated on the away goal rule. Coach Helmut Jäschke decided to place young goalkeeper Oskar Kosche in the upcoming match against HFC Chemie in the 1989-90 FDGB-Pokal on 4 November 1989. The teams's long-time goalkeeper Bodo Rudwaleit then suddenly announced his immediate retirement from football.
At the time, the East German regime faltered under pressure from events in neighbouring countries, with thousands of East Germans leaving or applying to leave the country, and political mass demonstrations being held. Erich Honecker was forced to resign on 18 October 1989 and parts of the Berlin Wall were opened on 9 November 1989. People in East Berlin could now travel freely to West Berlin. The Stasi was transformed into the Office for National Security () (AfNS) on 17 November 1989. The transformation also ended the tenure of Erich Mielke as Minister of State Security. Mielke would soon be dismissed as the First Chairman of SV Dynamo as well. The match between FC Energie Cottbus and BFC Dynamo at the Stadion der Freundschaft in Cottbus on the fourth matchday on 9 September 1989 may have been the last match of BFC Dynamo that Mielke attended as minister. Mielke had attended the match together with Egon Krenz and their entourage. BFC Dynamo invited journalists to visit its training facility in Uckley in the Zernsdorf district of Königs Wusterhausen in Bezirk Potsdam. The facility had previously been completely sealed off from the public and treated as a military facility. The training facility had now been transferred to the legal ownership of the AfNS and would eventually be opened for public use.
Bayer Leverkusen manager Reiner Calmund saw the opportunity to recruit top players in East Germany as soon as the Berlin Wall opened. In connection with the match between East Germany and Austria in Vienna during the qualifiers for the 1990 FIFA World Cup on 15 November 1989, Calmund managed to obtain the contact details of Andreas Thom. He immediately contacted Thom in East Berlin and eventually convinced him to join Bayer Leverkusen. Calmund further reached an agreement with East German officials on a transfer. Coach Jäschke was not consulted about the transfer and claims that he was presented with a fait accompli. The transfer was officially announced on 12 December 1989, making Thom the first player in the Oberliga to be transferred to the Bundesliga after the fall of the Berlin Wall. The transfer fee amounted to 2.5 million Deutsche Mark. Sources in West Germany speculated that the German Football Association of the GDR (DFV) would receive 15 percent of the sum. Club President Herbert Krafft announced that a larger sum would also be made available to the Ministry of Health, to be used to promote the sport to the next generation.
BFC Dynamo played to a 0–0 draw in an away game against BSG Wismut Aue on the 13th matchday, on 1 December 1989. The match would be the last league match of Andreas Thom at BFC Dynamo.