Madrid, Spain – City Guide Madrid, the capital of Spain, is located in the centre of the Iberian Peninsula and has over 3 million inhabitants. The city’s name originates from Mayrit, the name of a former Muslim settlement in the area. It is situated next to the river Manzanares, 660 metres above sea level and is described as a cosmopolitan city that offers a wide range of attractions, museums, palaces and monuments along with shows such as flamenco and bullfighting. Compare airfares and find cheap flights to Madrid with eDreams. Madrid is Spain’s centre for economics, and government administration, as well as the residence of the monarchy. It is a lively city with a dynamic culture and a vibrant nightlife which makes it one of the most popular tourist destinations in Spain. The surroundings of this fabulous city are also worth visiting, with villages such as Alcalá de Henares and Alcobendas.