British secret agent Harry Palmer (Michael Caine) is sent to Berlin by his superior Colonel Ross to arrange the defection of Colonel Stok (Oskar Homolka), a prominent Soviet intelligence officer. Palmer is skeptical but links up with Johnny Vulkan (Paul Hubschmid), an old German friend and former criminal associate, who now runs the Berlin station for British intelligence.
Palmer makes a rendezvous with Stok in the Soviet zone of the divided city and finds him eccentric and likeable. Stok asks for the defection to be managed by Otto Kreutzman, a West German criminal who has organized a number of recent escapes. When Palmer returns to the western sector he meets a gorgeous model who calls herself Samantha Steel (Eva Renzi), with whom he spends the night. Suspicious at the forward manner in which she approached him, he has his police contacts establish her identity the following day and arranges for a criminal to burgle her apartment, where several different false passports are discovered.
Meanwhile, Palmer arranges a deal with Kreutzman to bring Stok across the wall for £20,000. Palmer then returns to London to report. Ross is convinced that Stok's defection is genuine and dismisses Palmer's suspicions that the model he met in Berlin was a spy. Ross gives full authorisation for Palmer to return to Berlin to complete the deal, with documents and money provided by a man at Intelligence headquarters named Hallam (Hugh Burden).
The plan devised by Kreutzman is to arrange a burial and bring the Colonel across the border in a coffin. When Palmer again meets Samantha, she admits that she is a Mossad spy and that she is in Berlin to hunt down a war criminal named Paul Louis Broum - now operating under an alias - who stole millions of pounds of gold during the Second World War.
Kreutzman goes over to the east to supervise the defection personally in view of its importance. Palmer waits with Kreutzman's henchman on the western side of the border, where the coffin is delivered to an abandoned warehouse. When it is opened, however, Palmer finds the dead body of Kreutzmann. Palmer is knocked unconscious by Vulkan, who gets hold of the Broum documents that were included as part of the deal but is held up by Samantha and two other Israeli agents who take away the papers.
When Palmer informs Colonel Ross about the Broum documents, he is told that towards the end of the war, Paul Louis Broum murdered a resistance fighter called Johnny Vulkan at a concentration camp and assumed his identity. Ross got hold of the documents and used them to blackmail Broum into working for him. He now orders Palmer to kill Broum, but Palmer allows him to get away instead. Palmer later meets Stok, who is in West Berlin for a routine meeting with his Western counterparts. The Russian confirms that his supposed defection was just a trap to get rid of Kreutzmann. He even jokes that if Palmer ever wishes to defect to the East, he should ask Vulkan, who "knows the way".
Meanwhile, the supposed Vulkan goes to Samantha's flat, murders an Israeli agent and gets the documents back, but when he meets with Hallam they discover that they are forgeries. Hallam goes to Palmer, saying that he has been sent by Ross to get the real documents back. Palmer forces him to admit that he is in league with Broum to get them out of London and they now intend to use them in order to claim the Nazi loot that Broum deposited in a Swiss bank.
Hallam forces Palmer to go with him to a quiet part of the Berlin wall through which Broum and he intend to slip into the East, but Broum kills Hallam and is subsequently killed by the Israeli agents tailing Palmer. Back in London, Ross is satisfied that the dead Vulkan will be taken for another martyr shot while escaping to the West. Offered a bonus for his work, Palmer refuses and leaves.
In a short documentary film entitled "Man at the Wall: The Making of Funeral in Berlin" produced by Paramount Pictures about the production of the movie, Michael Caine says that director Guy Hamilton – who directed Goldfinger and three later James Bond features – would make on-set improvisations to the script based on his own personal experiences working for British military intelligence during World War II.video
Funeral in Berlin was released as a Region 1 DVD on 14 August 2001.