The tech giant had intended to open a 3,000-square-meter facility for start-ups in the Kreuzberg district of the German capital.
But the company met with angry opposition from residents, who opposed Google's presence in the bohemian neighborhood and the effects of gentrification on real estate prices.
Google has now said the space will go to two nonprofit organizations, saying it will become "a home for social commitment."
"We are happy to see that a small neighborhood which is organized and connected in the spirit of solidarity and equipped with a reasonable critique of tech-capitalism and its effects on local communities is able to successfully stand up to one of the biggest companies worldwide," said activist Konstantin Sergiou from the organization Bizim Kiez, part of the No Google Campus Alliance group.
"Being confronted with the stress of permanent protest is clearly not the atmosphere in which people want to network and discuss ideas," he added. "We believe that the protest played a central role in Google's decision."
Activists have been protesting the plans since they were unveiled in 2016. Many opposed the company's tax practices and data-collection policies, as well as the gentrification of the Kreuzberg area.
"Protest works," campaign group GloReiche wrote on Twitter following the news of Google's reversal.
AFP reported that real estate prices in the Kreuzberg area rose by 71% between 2016 and 2017, citing a study by property consultancy Knight Frank. The firm also found that the 20.5% jump across Berlin was the largest rise of any city in the world.
Google's German spokesman, Ralf Bremer, told CNN that the move was "the result of 18 months of conversations with neighbors, social organizations, policy makers, shop owners and many others," and added: "We do not allow that unconstructive protests dictate our actions."
'We are suspicious'
The Berlin campus was set to be Google's fourth in Europe and seventh around the world.
It currently has facilities in London, Madrid and Warsaw, as well as Tel Aviv, Seoul and São Paulo.
But while protesters celebrated, some raised questions about the company's decision to use the space to house Betterplace, a non-profit donation platform, and Karuna, a Berlin-based humanitarian organization.
"Betterplace and Karuna seem to do an honest job, but in this context, it is not farfetched to assume that they might have gotten into the role of a social facade and placeholder for the internet giant, even without really realizing it," said Sergiou of Bizim Kiez.
"Of course we are happy about the message from Google that there will be no Google campus in Kreuzberg. And to open the house for social activities sounds like a good thing," Stefan Klein, a local activist with the GloReiche neighborhood group, told CNN.
"But we are quite suspicious (about) what these social activities will be, and we will do some research on this topic in the next days," he added.
CNN has contacted both companies with a request for comment.
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