Watched by most of the 1978-79 Championship-winning squad Rangers were ahead inside a minute. Gary Wood was upended by Jamie Bishop and Denis McLaughlin hit the resultant penalty into the net.
Both sides played some fluent football on a tricky surface and Mark Peat pulled off a great save from Gary Wood. Rangers deserved their half-time lead.
They quickly added a second three minutes after the re-start, Wood forcing the ball in from close range after Peat fumbled and Iain Thomson shot.
A third followed when David Greenhill sent an accurate pass to Wood whose perfect ball to Thomson was whipped in to the far corner.
Two minutes later Arbroath replied with Willie Martin slamming home a spot-kick after an infringement on the Berwick goal-line.
Revitalised Arbroath roared back into the game, hitting a series of high balls into the danger area. Tactics paid off, when Marc McCulloch hoisted a long ball through the middle and substitute Bryan Scott volleyed brilliantly past Gary O'Connor.
Both teams went flat out in the closing minutes with Wood going close for Berwick and Scott within inches of equalising for a visiting side which fought back with great spirit.
Four players were booked, Gary O'Connor and Thomson of Berwick, Bishop and Ian Dobbins of Arbroath.