"A million liters of water and all the fish inside spilled onto the ground floor" of the hotel complex housing the aquarium, a spokesman for the Berlin fire department told AFP.
Guests at the Radisson Blu hotel reported being woken up by a loud bang and the feeling of a small earthquake, before seeing the destroyed aquarium and wrecked hotel lobby.
Two people suffered light injuries from glass splinters and were taken to hospital and all the fish died.
"It was a full-on tsunami," said Berlin Mayor Franziska Giffey, adding that it was pure luck the incident had happened in the early morning when very few people were around.
"Despite the terrible destruction we're seeing, we're lucky people weren't seriously injured," she told reporters.
The 1,500 fish in the tank however "could not be saved", Giffey added.
More than 100 emergency workers were at the scene, which was scattered with glass and other debris.
Berlin police said water had "massively" leaked onto the adjoining Karl Liebknecht Street, forcing the partial closure of the major traffic artery. Tram service was also suspended.
The area around the hotel remained sealed off by the early afternoon.
The deluge of water left a path of destruction in its wake, breaking windows and doors and sweeping chairs, tables and plant pots into the street outside the hotel.
Pictures and videos circulating online, apparently from guests staying at the hotel, showed extensive damage to the transparent aquarium, with only the frame still standing.
German lawmaker Sandra Weeser, who was staying at the hotel when the aquarium burst, said she was woken up by "a kind of shockwave".
"There was a slight tremor of the building and my first guess was an earthquake," she told the Berliner Morgenpost newspaper.
The area where the aquarium once stood was now just "dark and wet", she said, recalling how she saw "one of those large parrot fish lying on the ground, frozen".
Around 300 guests were staying at the hotel. They have been evacuated.
The complex that housed the aquarium is also home to the GDR museum, devoted to everyday life in former communist East Germany.
The Bild newspaper said the aquarium had only reopened this summer after a two-year renovation that cost around 2.6 million euros ($2.7 million).