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The Inland Road, shot in and around the historic town in autumn 2015, stars Cromwell youngster Georgia Spillane, who plays Lily.
The 399-film festival opens on Friday.
Producer Aaron Watson, who lives in Wellington but was Dunedin-born and bred, said he and Jackie van Beek, the film's writer and director, were thrilled the film would have its worldwide premiere at such a prestigious festival.
``It also feels very appropriate as the first short film we worked on together, Go the Dogs, premiered at Berlin in 2011.''
Mr Watson said one of the film's executive producers, Queenstown's Brett Mills, rallied the local industry behind the project.
``One of the most satisfying aspects of the film's selection is the recognition of all of the talent, hard work and dedication of our cast, crew and supporters.
``The film industry in Queenstown couldn't have been more welcoming to us and made the shoot a real pleasure.
``We had a real mix of levels of experience on the shoot and the senior crew were very generous to the less experienced crew members.''
The film sparked conflicting emotions for Georgia, now aged 7.
``It's nerve-racking and exciting at the same time,'' she told the Otago Daily Times, adding: ``I'm nervous about seeing myself [on screen].''
She also described the experience as ``challenging and it was easy''.
Would she like to act in a movie again? ``Yeah. I liked it a lot.''
Mum Josie Spillane said the film's premiere was a ``pinch yourself'' moment.
``You never thought that you'd be celebrating the fact that your daughter's first movie is having its worldwide screening in Berlin.
``It's pretty exciting.''
Georgia, who attends Cromwell Primary School, will not travel to Berlin and has not even seen the movie.
She will attend a cast and crew screening after the Berlin festival.
Ms Spillane is keeping her feet on the ground about the prospect of her daughter receiving phone calls for more acting work, after the film's release.
``We'll see what happens,'' she said.
``We're stoked for the fact that forever and a day she's going to have this moment in her life captured on film.
``There aren't too many Kiwi kids that can get to say that.
``If nothing more happens from it, it's been an amazing experience in itself.''
The film is about a teenage survivor of a fatal car crash, who moves in with the strangers involved in the accident, threatening the family's delicate balance.
Its script was developed with Film Otago Southland's writer in residence scheme.
A date for the New Zealand release of The Inland Road is yet to be announced.
Two other New Zealand films will feature at the Berlin festival: Poi E: The Story Of Our Song and One Thousand Ropes.