The development of Madrid has been conditioned by its otherwise unremarkable river, the Manzanares. This runs down from north to south, to the west of the city centre, then curls eastwards before disappearing underground outside the city limits. Apart from this geographical factor, the city's ring road, the M-30, follows the course of the river for much of its length, and most of what lies outside it can be considered "suburban."

Madrid, then, has always grown north and east from its centre of gravity, an undefinable point lying somewhere between the Puerta del Sol, a large square dating from the 18th century; the Palacio Real, Royal Palace; and the Plaza Mayor, the "Big Square," perhaps less relevant today than the Puerta del Sol, but much older and grander. The Plaza Mayor is the entrance to Hapsburg Madrid, the city's most historic area, though not its oldest: that is La Latina, originally the city's mediaeval Morería, Moorish district.

• Hapsburg Madrid. Also called Madrid de los Austrias, it is technically part of the Centro district, but has a different feel to it. Beginning with proto-Hapsburg Fernando of Castile, the Hapsburg dynasty, called in Spanish the Casa de Austria, oversaw the construction of the Spanish Empire, and Hapsburg Madrid is characterized by un-Spanish-looking red-brick palaces with unmistakeable dark slate rooves and often Central European-style towers or chimneys. Madrid de los Austrias occupies much of the city centre, especially the area west (Calle Mayor) and south of the Plaza Mayor, where, as in the La Latina district, it becomes obvious that many of the narrow winding streets follow a mediaeval course. Hapsburg Madrid is particularly rich in sights, including the Plaza Mayor itself, and the Plaza de la Villa, off the Calle Mayor.
• The Plaza de Oriente marks the division between Madrid Corte y Villa, court and town (Franco used to address the crowds here, and fascists still come here on the anniversary of his death to sing misty-eyed fascist hymns and throw things at the police). Around it stand some of Madrid's most interesting sights: the Palacio Real and its gardens; and the Catedral de la Almudena; while east of it the Calle Arenal runs from the Teatro Real (Metro: Opera) back to the undeniably plebian Puerta del Sol.
• The Centro district includes all the above and more, but especially the area north of the Calle Arenal and Puerta del Sol up to the Gran Vía. As well as Madrid's most popular shopping area, around Calle Preciados, notable sights here are the Convento de la Encarnación and the Monasterio de las Descalzas Reales: both are unremarkable when seen from the outside, but outstanding to visit.
• La Latina, south of the Plaza Mayor, much of which corresponds to the old Morería, Moorish quarter, especially the streets running west from the atmospheric Plaza de la Paja. East of it, the parallel streets Cava Baja and Cava Alta are lively night-time areas, the former especiallly packed with bars and restaurants, some of which are among the best in Madrid. The Rastro, Madrid's famous flea-market, and the area where it is held, are actually found on the other (east) side of the Calle de Toledo.
• The Barrio de las Letras begins south-east from the Puerta del Sol, around the Plaza de Santa Ana. The streets converging here are all lively night-time areas, some more nocturnal than others, especially notable being Calle Huertas. Lope de Vega and Cervantes both lived around here.
• The Lavapíes district begins at the Plaza de Tirso de Molina (named after another Spanish writer) and continues south to the Plaza de Lavapiés and around. This was once Madrid's Judería, Jewish quarter, as you can tell from its narrow streets, and is now the city's most cosmopolitan area, with its highest density of immigrants. In spite of this, it is one of Madrid's most castizo districts, meaning that coming from here makes a trueblooded Madrileño, in the same way that being born within the sound of London's Bow Bells makes you a Cockney.
• The Paseo del Prado connects Madrid's three great art galleries to make what the marketing boys call its "Golden Triangle." They are the Museo del Prado itself, the Museo Thyssen-Bornemisza and the Museo Nacional Centro de Arte Reina Sofia.
• Another (more triangular) triangle is found around the Parque del Buen Retiro, behind the Prado, which contains Madrid's most important gardens. Its three points are the Royal Observatory, the Prado Museum, and the Real Jardin Botánico, and they represent the height of enlightened despotism in Spain.
• The Calle de Alcalá, another castizo thoroughfare, runs east from the Puerta del Sol for miles, even crossing the M-30 ring road. It is an important shopping street, of most interest to visitors for the emblematic Puerta de Alcalá which stands in a roundabout at one corner of the Retiro Park.
• The Gran Vía runs north-west from the Calle Alcalá to the Plaza de España, and holds many of Madrid's most interesting 20th-century buildings, such as the Gotham-City-like Telefónica Building.
• Chueca is Madrid's famous (emblematically but far from exclusively) gay barrio. It is found north of the Gran Vía at its eastern, Calle Alcalá end, and some of Madrid's best nightlife is to be found there.
• Note that much of the Centro area north of the Gran Vía and west of the Plaza Callao is best avoided by visitors. It has been run down for decades, is thick with tramps, drunks and drug addicts and is slightly dangerous, though not without interest.
• Malasaña lies north of the Gran Vía and west of the Calle Fuencarral. It is a castizo area, but popular at night with young tribespeople of all kinds, who spill out of the bars and pubs and annoy residents by drinking in the street in huge numbers. It is best avoided unless you are comfortable with this kind of environment.
• The Paseo de la Castellana is a broad avenue beginning at the Plaza Cibeles, at the northern end of the Paseo del Prado, and running south-north for miles, all the way up to the Plaza Castilla.
• The Salamanca district lies east of the Castellana. It is a residential area, traditionally an upper-middle-class stronghold, and the home to Madrid's most exclusive shopping areas, especially around the Calle Serrano.
• Moncloa and Argüelles are the districts found at the other, northern end of the Calle Princesa, the continuation of the Gran Vía on the west of the Plaza España. Argüelles, particularly, is a hive of student activity, because of its proximity to the university faculties of...
• ...the Ciudad Universitaria, a complex of early twentieth-century buildings which was bitterly fought over during the Siege of Madrid in the Spanish Civil War.
• Bilbao and Alonso Martínez are residential areas to the north of Malasaña / Chueca. On weekends, they are the playground of young, middle-class Madrileños whose parents give them too much pocket money.