The club became independent in 1921 and gradually established its own identity. Atletico won its first La Liga title in 1940, shortly after the Spanish Civil War. Under the name Atletico Aviacion, the club won back-to-back league titles in 1940 and 1941.

Throughout the 1950s and 1960s, Atletico became one of the top clubs in Spain, often challenging Real Madrid and Barcelona. In 1974, the team reached the final of the European Cup (now Champions League) but lost to Bayern Munich. They later won the Intercontinental Cup that same year.

The 1990s were marked by ups and downs. Atletico won a famous domestic double—La Liga and Copa del Rey—in 1996 but was relegated to the second division in 2000. After returning to the top flight, the club began to rebuild its strength.