The Schaubuehne theatre told AFP that cuts laid out in the city's latest budget plans "would lead to insolvency by the end of 2025".
Berlin's cultural scene has been up in arms at proposed cuts in support for the arts from next year in the city state, where venues are already battling fast-rising rents.
The city government has proposed cuts to arts funding totalling 130 million euros, some 12 percent of the total culture budget.
Founded in 1962 in what was West Berlin, the Schaubuehne has long made a name for itself with its progressive programming.
Since 1999 it has been led by renowned director Thomas Ostermeier, who has received several international accolades for his work.
In a statement sent to AFP, the Schaubuehne said the only alternative to bankruptcy would be "a huge programme of restructuring and dismantling which would mean losing what the theatre stands for."
It added that it was already closing an experimental studio as a first reaction to the funding cuts.
It called on city councillors to "take into account the real situation of the Schaubuehne and that of other theatres that are facing similar problems" when they make their final decision on funding.
Berlin's culture minister Joe Chialo told local media earlier this week he was still negotiating to see if the cuts could be reduced.
Other proposed savings in the Berlin city budget have also caused controversy, including the abolition of the popular 29-euro monthly public transport ticket.
The ticket was only introduced this summer and already has 200,000 users.
