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Granada Club de Fútbol was founded on 14 April 1931,[3] originally as Recreativo de Granada; the first president was Julio López Fernández.

The first football match was played against Deportivo Jaén, which resulted in a 2–1 victory. The first goal in the match, and in the club's history, was scored by Antonio Bombillar. In the 1931–32 season, the club won the Tercera Regional – Región Sur championship.

After several promotions, in 1941–42 the club made its La Liga debut. From here until the '80s, it alternated between that category and Segunda División, with its golden age coming during the '70s, with eight top flight seasons, which included a career-best two sixth league places (1971–72, 1973–74).

In 1959 Granada achieved its greatest sports landmark, being runner-up of the Copa del Generalísimo (later Copa del Royal). In the final, played at the Santiago Bernabéu Stadium, the team lost to Barcelona 4–1.

In the 1980s, Granada had some brief appearances in the second division, but it spent most seasons in Segunda División B, dropping another level in 2002–03, due to non-payment to its players. After four seasons in the fourth division, former Real Madrid president Lorenzo Sanz, along with his son Paco, arrived at the club. With their help, the Andalusian side was again promoted to the third category but got itself into serious financial trouble.