They both mean it's not working, but "it's broken" is the correct usage. "It's broke" while technically incorrect, is still commonly used in informal conversational English. But if you want to speak in a correct or more formal register, then you would avoid using this form. When trying to choose between 'broke' or 'broken' (as an adjective), the general rule is 'broke' should only be used when describing being out of money. "He is broke" (He has no money/He has run out of money) is correct, for example. For all other cases, use 'broken' as the adjective. "My watch is broken" "My arm is broken" "Those toys are all broken". "He is broken after the breakup with his girlfriend".

Pelin. If you drop your cellphone and it no longer works, it is broke or broken. We (native English speakers) use it nearly the same. If you use either expression, anyone will understand you. We use both very often. As Majertain said, 'broke' is not proper grammar, but, it is used often in the USA in everyday conversation. Better to say 'broken' if you're worried about grammar.

You can not say it’s broke. It’s slang and improper grammar. It is just how some who don’t want to say the whole thing and say “it is broken.” But you can say “I’m broke” that in American slang mean I don’t have any money.