When Bruce Springsteen turned up in Communist East Germany on 19 July 1988, it was, according to one fan, a "moment some of us had been waiting a lifetime to hear". The US rock star greeted an audience that was restless, jaded and sick of being locked behind the Berlin Wall. And nothing, as it turned out, was to provide a better outlet for their frustration than a rock'n'roll concert.

But it was still a surprise when an estimated 300,000 people from all over the German Democratic Republic (GDR) surged into a large field by a cycle track to hear him play, while millions more watched the shaky and distorted transmission on state television. Historians believe almost no young East Germans did not know about it.

Communist authorities, whose regime was notorious for widespread censorship, suppression of political opposition and spying on its people, had given its youth wing, the Free German Youth (FDJ), the go-ahead to book one of the west's most popular musicians in a desperate effort to release some of the growing tension. However, the event had the opposite effect. "It was a nail in the coffin for East Germany," said Jörg Beneke, who was there that day.

Now, in the biggest collection of eyewitness reports, files from the Stasi secret police and interviews with Springsteen's entourage, a new book has pieced together how the gig inflamed a spirit of rebellion that contributed to the fall of the Berlin Wall 16 months later.

"Forget David Hasselhoff," says Erik Kirschbaum, author of Rocking the Wall, referring to the actor-singer whose single Looking for Freedom was No 1 in West Germany in the spring of 1989 – and who famously claimed he brought down the Berlin Wall. "Unlike Springsteen, Hasselhoff didn't go to East Berlin to perform, and neither did he call for the wall to come down a year before it happened."

The highlight of Springsteen's four-hour concert, in which he played a total of 32 songs, was undoubtedly a passionate speech, delivered in a creaky but understandable German, that carried a subtle but clear political message. "I'm not here for any government. I've come to play rock'n'roll for you in the hope that one day all the barriers will be torn down," he said to a crowd that erupted, before he launched into Bob Dylan's Chimes of Freedom, whose lyrics – about the "city's melting furnace … with faces hidden while the walls were tightening" – could hardly have resonated more with his captive audience, many of whom the crowd waved homemade American flags.

Historians believe Springsteen's gig, far from appeasing people, simply made them want more. "Springsteen's concert and speech certainly contributed in a large sense to the events leading up to the fall of the wall," Gerd Dietrich, professor of history at Berlin's Humboldt University, told Kirschbaum. "It made people … more eager for more and more change … Springsteen aroused a greater interest in the west. It showed people how locked up they really were."

According to Thomas Wilke, an expert on the impact of rock and pop music in East Germany, it was the GDR's biggest concert ever. "It was a topic of discussion for quite some time afterwards, he said. "There was clearly a different feeling and a different sentiment in East Germany after that concert."

Among the 80 pages of files Kirschbaum dug up from the Stasi archives was evidence that the concert was part of a leadership-sanctioned campaign to assuage the country's youth. "They were still reeling from incidents in 1987 when police used truncheons and electric stun guns to beat back East Berliners who, hungry for some of the fun the west was enjoying, had pressed themselves as close to the Berlin Wall as possible to listen to concerts by the likes of David Bowie and the Eurythmics that were being held just metres away from them in West Berlin."

A year later, before Springsteen's gig, thousands of troops lined the wall to keep East Germans at bay as Pink Floyd and Michael Jackson played in the west.

The decision to site the Springsteen concert far from the wall, in the depths of East Berlin, was a strategic one, to prevent huge crowds gathering at the border and – intoxicated by rebellion – sparking an impromptu revolution.

One Stasi file reveals how the FDJ sought to justify Springsteen to its communist elders, most of whom had no idea about rock'n'roll. "He's considered to be at the undisputed pinnacle of contemporary rock music in the world today," they said. The file also emphasised the singer's working-class roots, stressing how his music included "hard and unadorned songs about the shady side of American reality". They also tried to make the concert more palatable by misleadingly selling it as a charity concert for Nicaragua.

Even now, many who were there that night talk about it as a life-changing moment. "There was this underlying sentiment in the crowd that night that people didn't want to live behind a wall anymore," Andrea Dubois, then a 27-year-old scientist, told Kirschbaum.

"It was gradually dawning on everyone between about 20 and 30 years old that things couldn't just continue in East Germany the way they had been going. Something had to change. And when Springsteen came, his concert fitted right into all that."

But what was so special about Springsteen? Kirschbaum believes East Germans tuned into his working class ethic, not least his willingness to play for free. The Rolling Stones were also huge and they, too, Kirschbaum is certain, could have had a huge impact. "But they wanted hard currency, which the East didn't have, so they didn't get there until the summer of 1990, once the East Germans had converted their ostmarks into deutschmarks."

Years later, Springsteen reflected on the concert himself. "Once in a while you play a place, you play a show that ends up staying inside of you, living with you for the rest of your life," he said. "East Berlin in 1988 was certainly one of them."