Madrid (/ˈmædrɪd/ MAD-rid) is a town in Houston County, Alabama, United States.

B. Steele began to build the Bay Line Railroad from Panama City, Florida to Dothan, Alabama.

The Geneva Lumber Company also surveyed a country road from Cottonwood, Alabama to intersect the railroad.

In 1905, Ed Watford, a resident of Houston County, bought 180 acres at the intersection, intending for it to become a town.

B. Dell and his partner W. C. Fenn, prominent people in Houston County, bought 80 acres east of Watford's property.

However, Dell and Fenn threw a big celebration for their public action, throwing a barbecue and hiring a brass brand.

After a prosperous beginning, Madrid's population began to precipitously decline when the boll weevil started attacking cotton crops and timber supplies were exhausted.

The racial makeup of the town was 82.84% White, 16.17% Black or African American, 0.33% Asian, and 0.66% from two or more races.