The hip scene of Mitte, the historic core of Berlin, is best experienced in the narrow streets and courtyard mazes of the Scheunenviertel (Barn Quarter), which also encompasses the former Spandauer Vorstadt (Jewish Quarter), the streets around Oranienburger Strasse. Some streets are lined with edgy shops, bars, and eateries, while others look empty and forlorn. During the second half of the 17th century, artisans, small-business men, and Jews moved into this area at the encouragement of the Great Elector, who sought to improve his financial situation through their skills. As industrialization intensified, the quarter became poorer, and in the 1880s many East European Jews escaping pogroms settled here.
Northeast of Mitte, the old working-class district of Prenzlauer Berg used to be one of the poorest sections of Berlin. In socialist East Germany, the old and mostly run-down tenement houses attracted the artistic avant-garde, who transformed the area into a refuge for alternative lifestyles (think punk singer Nina Hagen, stepdaughter of a folk singer expelled by the East German government). The renovated 19th-century buildings with balconies and stuccowork tend to feature unwanted graffiti, but Prenzlauer Berg is now a trendy area full of young couples with babies in tow.
Though not full of sightseeing attractions, the two areas are great for wandering, shopping, and eating and drinking. Mitte's Scheunenviertel is popular with tourists, and you'll find a denser concentration of locals and settled-in expats in Prenzlauer Berg.