The success of wartime film experience spurred the founding of more private companies, including Universal Films Incorporated (Universum Film Aktiengesellschaft or UFA) in 1917, shortly before World War I ended. Led by powerhouses such as UFA, postwar German film expressionism became known for ingenious scenic effects as well as improved camera and lighting techniques, all of which rapidly revolutionized cinematic possibilities. Movies were also deeply influenced by adverse social factors brought on by the consequences of a lost war, revolution and economic crises. The “demonic canvas” of the movies was saturated with heavy-handed psychoanalysis and obsessive concern with subconscious motives. Movies showed threatening men possessed by villainous and even split personalities (Dr. Calligari, Dr. Mabuse), while women were stereotyped as pert “modern girls” with pageboy hairstyles (Ossi Oswalda, Lya de Putti). By the mid-twenties, another feature of the film industry became increasingly manifest – the advent of major stars having cultlike status.
 
 

The 1928 introduction of sound in movies had a profound effect in Germany, just as it did in Hollywood. Some film stars like Asta Nielson slipped into oblivion while others, like Henny Porten and Pola Negri, rose in stature. During the Depression, popular demand for practical role models in difficult times led to newer movies featuring men with “good-buddy” personalities (such as Willy Fritsch) and women of “nice next-door neighbor” qualities (such as Lilian Harvey). While the musical (filmoperette) remained the dominant type of movie, new categories multiplied to include crime, comedy, and adventure fare.
 
 

The National Socialist regime of Adolf Hitler, which came to power in Germany during 1933, overhauled the film industry for its own purposes.  Hitler and his subordinates realized the obvious propaganda value of movies, and concentrated on retooling them to further Nazi designs over Germany.  Many of the most creative producers and actors were forced to flee (among them Peter Lorre and Fitz Lang) or were imprisoned. Anyone with Jewish blood was mercilessly hunted down and many lost their lives. As talented directors and stars disappeared, and movie themes shifted toward propaganda meant for internal German consumption, the previously hard-won international acclaim for independent German film-making vanished overnight.
The Nazi stranglehold over movies was reinforced by both stringent censorship and the 1937 nationalization of the entire film industry. Party officials now supervised every detail of writing, directing and distributing movies that German audiences were permitted to see. Anyone who dared to protest or was slow to “get with the program” was dismissed or imprisoned. The films had only one real purpose, to Germanize the population in conformity with the Will of the Nazi Party. This tactic initially had mixed results, because the German public disdained obvious propaganda and avoided Nazi favorites like "Hitler boy Quex".
Hitler’s official Minister of Popular Enlightenment and Propaganda,  Paul Joseph Goebbels, adjusted film production accordingly.  Clumsily prepared and heavy-handed propaganda films were replaced by movies with subtle ideological manipulation woven into their plot lines. Goebbels resorted to every trick, including alteration of facts and outright falsification of history, in order to persuade Germans to believe National Socialist ideals. One of the most powerfully influential movies of this type was the dangerous Nazi production, "Sweet Jew” (Jud Suess), which portrays Jewish merchants as self-serving traitors willing to commit treason against Germany in order to advance religious objectives.

When Germany entered World War II, Goebbels cleverly devised a new role for the movies – to maintain public morale.  Almost 90 percent of total German movie production during the war was devoted to this task, but  it became increasingly difficult  to sustain the German mood as early victories were eclipsed by long years of retreat and homeland bombing. Goebbels proved a master of his craft, however, and churned out light cheery movies and musicals with pretty girls and dashing men.  To help divert Germans from the present and its depressing wartime reality, he even directed that the “German greeting” (Sieg Heil salute) be deleted from movie scenes  Major movie stars were encouraged to continue flaunting their personal trademark performances and enjoy cult status with a strong following of faithfully obedient fans.

German movies became more and more an escape mechanism from reality as the fortunes of war worsened. However, while Goebbels emphasized entertainment over allusions to the current situation, he insured that his films never became neutral or harmless in their service to Nazism. In the music films, for example, the marching-steps and skirts of the revue parades were heightened  in deliberate pace to counterbalance enemy strikes. The movies cheerfully harmonized with Nazi promises for patience with current adversities, because miracle weapons could still turn the tide of battle.  Even actress Zarah Leander remarked, "I knew, all at once that a miracle could still happen". Then, at the last moment, Goebbels produced a desperate series of color epics, such as “Kolberg” (released in 1945), to show how German cities might heroically resist oppressive invaders. Shortly thereafter, the Nazi Reich was overrun by advancing Allied armies.
 
 

After the conclusion of World War II, German producers and film crews worked tirelessly to produce what became known as the “rubble films” (Truemmerfilme). Unfortunately, these movies were also shameless propaganda vehicles, produced under the controlling supervision of Allied military governments, that insisted on audience introspection to face their Nazi past (typified by “Murderers Among Us” and “In Those Days”). German audiences, however, spurned movies that forced them to accept moral responsibility and view the recent past critically. They thronged instead to imported American movies and even favorite light-entertainment films from Nazi times. The latter flicks unbelievably soon reappeared as American and British governments deferred to German tastes in order to align Germany against Communism in the Cold War  Thus, throughout the latter 20th Century the German film industry never regained the global recognition and former glory that it once enjoyed before Hitler came to power.