Woodgate signed for Real Madrid in August 2004 for a transfer fee of £13.4 million.

This was to the surprise of many in the football world, due to his frequent absences through injury at his previous clubs, and indeed he was injured at the time of the transfer. Woodgate did not make any appearances for Real Madrid in his first season in Spain, eventually making his debut on 22 September 2005, in a league match against Athletic Bilbao.

However, the game went extremely badly for him, as he scored an own goal and was later sent off for a second bookable offence.
He scored his first goal for Real Madrid in the 4-1 UEFA Champions League defeat of Rosenborg B.K. on 19 October 2005, his first appearance for the club in European competition.
By February 2006, Woodgate had established himself as a first-team player, with the other centre half position alongside him often rotating among the likes of Sergio Ramos, Iván Helguera, Francisco Pavon and Álvaro Mejía, with one Spanish newspaper even having described him as having "become Madrid's true leader". However, further injury setbacks again stopped him playing. He was considered to have an outside chance of making the England squad for Germany 2006, but due to surgery on his back was not named in the squad. Woodgate was frequently linked to a full time return to the Premiership with Newcastle United, who it was rumoured had first refusal on any sale. Real Madrid decided that he should be put out on loan back to the Premiership in the 2006/2007 season. Liverpool F.C. Middlesbrough and Newcastle were all said to be interested,[4] with Newcastle being the most likely destination after freeing up the number 6 shirt which was said to always be available to him. On 26 August 2006, Woodgate confirmed that he was returning to the English Premiership on a loan move. Newcastle and his home town Middlesbrough were the favourites to capture him, as Liverpool stated they had no interest in acquiring him. [edit] Middlesbrough On 30 August 2006, Woodgate signed a 1-year loan move to hometown club Middlesbrough. The deal includes the option for Middlesbrough to sign him permanently, although it is rumoured Newcastle were given first refusal on the England international. However, it appears this was not the case as Woodgate opted to join Middlesbrough despite fierce competition from local rivals Newcastle claiming 'I want to play for nobody else but Middlesbrough'. He made his debut against Arsenal at The Emirates Stadium on the 9th of September, giving a world-class performance. He was later voted man of the match by Middlesbrough legend Bernie Slaven on a local radio station. He was made captain for his second game for Middlesbrough, with usual captain George Boateng out with suspension. .