The first steps towards the foundation of Sydney FC were taken in April 2004 when Soccer New South Wales (now Football NSW) announced its intention to bid for a licence in the new A-League competition.

Sydney FC was officially launched as a member of the new 8-team A-League on 1 November 2004, with a 25% stake in the club held by Soccer NSW, the remainder privately owned.

[17] By February 2005, Sydney FC had filled 16 of its allowed 20 squad positions—attracting Socceroos Alvin Ceccoli, Clint Bolton, Steve Corica and David Zdrilic as well as youth internationals Justin Pasfield, Mark Milligan, Wade Oostendorp, Iain Fyfe and Jacob Timpano.

[23] Sydney FC's first competitive match was against Queensland Roar at Central Coast Stadium in Gosford as part of the 2005 Australian Club World Championship Qualifying Tournament.

After winning 3–0, Sydney went on to defeat Perth Glory and Central Coast Mariners to qualify for the 2005 Oceania Club Championship, held in Tahiti.

The start of the 2005 A-League Pre-Season Challenge Cup marked Sydney FC's first match at Allianz Stadium, as well as Dwight Yorke's first appearance for the club.

Upon reaching the semi-finals, Sydney's unbeaten run finally ended at 11 with Perth Glory midfielder Nick Ward scoring in injury time to inflict the new club's first ever loss.

Despite the ACL success, Sydney FC's start to the 2007–08 season was poor, and the club sacked him, replacing him with former Adelaide United manager John Kosmina.

Kosmina couldn't repeat the success of the previous season, replacing Brazilian international Juninho with Socceroos hero John Aloisi on a million dollar contract.

The club lost key players from its championship-winning side including Steve Corica (retired),[36] Karol Kisel (return to Europe),[37] Simon Colosimo,[38] John Aloisi,[39] and Clint Bolton[40] (all Melbourne Heart).

Sydney FC managed to pick up a few points over the next few rounds but another five-game losing streak ensured they would not qualify for the finals competition, finishing ninth.

[41] The signing was significant in that Emerton became the first player to directly exchange the FA Premier League for the A-League by terminating his Rovers contract one year early.

[51] During the January transfer window, Farina bolstered his defensive stocks with Socceroos captain Lucas Neill[52][53] and Brazilian Tiago Calvano[54] joining the team.

The pair made nil significant impact and with a 3–1 loss away from home to Brisbane Roar, Sydney were unable to pick up a vital point that would have seen them play in the finals, finishing seventh.

[70] Sydney FC's season began with the highly anticipated match-up against the newly re-branded Melbourne City and guest superstar David Villa.

Sydney FC continued on an eight-game undefeated streak that ended when Perth Glory came from behind to score two goals in the final seven minutes to claim victory at Allianz Stadium.

During this break, Sydney FC were able to bolster their stocks, signing Senegalese internationals Mickaël Tavares and Jacques Faty as injury replacement players.

[77] The following season was significantly less successful, finishing seventh in the league despite the star power of marquee Filip Hološko, and Serbian playmaker Miloš Ninković.

Sydney progressed to the knockout stages for the first time, losing on away goals to Chinese side Shandong Luneng with Hao Junmin scoring a 90th-minute equaliser to finish the Sky Blues continental hopes.

Arnold reformed Sydney for the 2016–17 season, beginning with the signings of Socceroos centreback Alex Wilkinson,[78] and leftback Michael Zullo[79] both from Melbourne City.

They finished the season as double winners – winning the 2017 A-League Grand Final 4–2 (1–1 AET) on penalties against Melbourne Victory at their former home ground, Allianz Stadium.

[85] The Sky Blues went on a successful FFA Cup run in 2017, starting with an 8–0 thumping of Northern Territory amateur side Darwin Rovers, with Bobô scoring a club record equalling 4 goals in the match.

The Sky Blues ran out 5–1 winners, with a brace from Bobô sealing their date with destiny in the 2017 FFA Cup Final to play Adelaide United.

It had already been announced that key players from prior seasons including Dutch defender Jordy Buijs, former Socceroos Luke Wilkshire, David Carney and Matt Simon had all left the club as well as youth product Anthony Kalik returning to Europe as his loan deal expired.

On 7 July 2018, after weeks of speculation, the club officially confirmed the exit of Johnny Warren Medalist Adrian Mierzejewski and the newly re-signed Golden Boot winner, Bobô, leaving big holes to fill in attack.

[91] In the following weeks after Bobô and Mierzejewski closed the door on their times at Sydney, the club announced the signings of former English Premier League star Adam Le Fondre[92] and Dutch midfielder Siem de Jong on loan from Ajax.

The current Sydney FC badge was released on 17 May 2017 and is a reworking of a design by Liam Johnson on behalf of and submitted by the club's supporter group, The Cove.

The main supporter group of Sydney FC is known as "The Cove",[117] and were originally located at the Paddington (northern) end of Allianz Stadium in bays 22–26.

On 7 July 2006, Australian rock singer Jimmy Barnes recorded a club song entitled 'Sydney FC for Me' with 25 members of The Cove singing back-up vocals.

The Cove was directly involved the creation of the modern Sydney FC badge, with them putting forward designs and ideas which carried over to the finished product.