In addition to their domestic success, Real Madrid's reputation as a major club was established by their outstanding record in the European Cup. To date have they have been crowned champions of Europe a record nine times. Alfredo Di Stéfano, Ferenc Puskás and other famous players helped the club win the European Cup five times in a row between 1956 and 1960, which included the memorable 7-3 Hampden Park final against Eintracht Frankfurt in 1960. The club won for a sixth time in 1966 with the team known as the Ye-Ye , defeating Partizan Belgrade 2-1 in the final with a team composed entirely of nationally-born players, a first in the competition. They were also runners-up in 1962, 1964 and 1981. Winning the competition five consecutive times saw Real permanently awarded the original cup and earning the right to wear the UEFA badge of honour. They have also won the UEFA Cup twice and were twice runners-up in the European Cup Winners Cup.

In 1996 President Lorenzo Sanz appointed Fabio Capello as coach. Although his tenure lasted only one season, Real Madrid were proclaimed league champions and several important players arrived at the club (Roberto Carlos, Predrag Mijatović, Davor Šuker and Clarence Seedorf) to strengthen a squad that already boasted the likes of Raúl, Fernando Hierro and Fernando Redondo. As a result, Real Madrid (with the addition of Fernando Morientes in 1997) finally ended its 32-year wait for the seventh European Cup in 1998 under manager Jupp Heynckes, defeating Juventus 1-0 in the final, thanks to a goal from Predrag Mijatovic. Real Madrid would go on to win again in 2000 and 2002 under manager Vicente Del Bosque, with sides including players such as Steve McManaman, Luís Figo and Zinedine Zidane.

Real Madrid are also three-time winners of the Intercontinental Cup, defeating Peñarol, Vasco da Gama, and Olimpia Asunción in 1960, 1998, and 2002 respectively.