Real Madrid sacked Jupp Heynckes shortly after winning the Champions League in May and hired former Valencia coach Guus Hiddink.

Having come fourth in the league and achieving continental success last season, Real Madrid was considered a favorite for the 1998–99 season.

There were also new arrivals such as Edgar Pacheco, Robert Jarni and Perica Ognjenović.

Despite these transfers, manager Hiddink was sacked in February due to criticizing several players.

Real Madrid also suffered an embarrassing Copa del Rey semi-finals exit after a 2–7 aggregate loss to eventual cup winners Valencia, as well as the Champions League quarter-finals exit against Ukrainian powerhouse Dynamo Kyiv, only winning the Intercontinental Cup that season.