The university was founded in 1499 by Francisco Cardinal Jiménez de Cisneros. During the 16th and 17th century, it gained recognition as a centre of academic excellence, with students and faculty including Antonio de Nebrija, Juan de la Cruz, Lope de Vega, Balthazar Alvarez, and Francisco de Quevedo. In fact, its success was so great that is now considered to have been a substantial influence on the new universities being formed in the Americas. The eighteenth century saw great change at the University of Alcalá, including a new academic program chartered by Melchor Gaspar de Jovellanos and the awarding of a Doctorate of Philosophy to María Isidra de Guzmán y de la Cerda, making her the first woman in Spain to hold such a title. In the middle of the nineteenth century, the university relocated to Madrid, where it is now known as Universidad Complutense or Complutense University. It was not until 1977, when Spain was a nascent democracy, that the people of Alcalá reopened a university in the old buildings and gave it the same name as the one which had moved out more than a century earlier.

Currently, the university is housed in both urban buildings in down town Alcalá and dedicated campuses in Alcalá and nearby Guadalajara. It has around 20,000 students, which makes the city of Alcalá de Henares strongly influenced by the university. It presents the highly prestigious Cervantes Prize annually, recognizing achievement in Spanish language and literature. It offers programmes of study in biology, economics and business, environmental sciences, law, Spanish and English philology, history, the humanities, medicine, chemistry, architecture, telecommunications, and many other fields. The strongest programmes are engineering, economics and business, although the humanities related programmes are also notable. Also, because it is the home town of Cervantes, and its geographical location, there are several foreign programmes in the city dedicated to the teaching Spanish.