At the start of 1897, young students at the Institución Libre de Enseñanza formed a sports group they named Football Club Sky. It was the direct precedent of Madrid Football Club.
An important group of players captained by Julián Palacios left Sky. Palacios led the split and unofficially presided over the newly established Madrid Football Club and its 50 members.
The first pitch Madrid played in was a plot of land next to the workshop of marble mason Estrada in the levelled area of Velázquez street, next to the construction works of future streets Lista and Núñez de Balboa.
On 6 March 1902, after a new Board presided by Juan Padrós had been elected, Madrid Football Club was officially founded. On 18 April, the Club Regulations, comprised of 22 articles divided into three headlines, were presented to the authorities. On 22 April 1902, José Sánchez-Guerra, Civil Governor of the Province approved the document.
To celebrate the proclamation of Alfonso XIII as King, Madrid Football Club created the first Spanish Championship. Alberto Aguilera, Mayor of the Town and Court of Madrid supported the organisation of this football tournament and donated a silver cup as the prize for the winning team. The tournament took place in Madrid and Vizcaya were the victors.
On 13 May 1902, the semifinals of the 1st Spanish Championship saw the first Madrid-Barcelona clash in history. Barcelona won 3-1 thanks to the six foreigners they lined up.
Alfonso Albéniz Jordana was the first player to leave Barcelona in order to join Madrid. On 23 May 1902, a newspaper of the time confirmed the transfer with the following lines: “We have learned that Mr. Albéniz, former notable and enthusiastic Barcelona player, has joined Real Madrid Foot Ball Club.”
Madrid were invited to take part in the festivities at El Escorial in 1902. Part of the programme featured a match between Madrid and Moncloa. On 11 August 1902, next to the facade of the monastery, the clash ended with a 6-5 score favourable to Madrid. The victors were awarded two ceramic plates that represent the first trophy the Club won in its history.
Carlos Padrós, President of Madrid 1904-08, was the creator of the Spanish Championship, the Madrid Championship in 1905 and one of the driving forces behind the creation of the Fédération Internationale de Football Association in 1904.
As the President of the Madrid Football Club Association, Carlos Padrós felt the necessity of creating a Madrid Championship that took place for the first time in the 1904/05 season. Madrid won the short-lived tournament (9 editions) five times.
On 18 April 1905, after eliminating Recreation San Sebastian from the Madrid Championship, Madrid faced Athletic Bilbao in the final and won thanks to a goal by Manuel Prast. This was the first official title in the history of the Club.
Madrid organised a friendly game against French side Gallia to commemorate the visit of French President M. Loubert to Madrid. The match took place on 23 October 1905 and ended with a 1-1 draw. It was the first international clash to take place in the Town and Court of Madrid.
Winning the Cup of Spain three consecutive years -1905, 1906 and 1907- allowed Madrid to keep the original Cup. They won the tournament again in 1908, achieving a four-year dominance over national football.
On 4 January 1909, after a meeting at the Club with delegates from other Spanish football clubs, the Spanish FA was born. Real Madrid President Adolfo Meléndez signed the foundation agreement after being named Secretary of the organisation by everyone present at the meeting.