UD Las Palmas was created on 22 August 1949 by the merger of all five leading clubs in the city: CD Gran Canaria, Atlético Club, Real Club Victoria, Arenas Club and Marino FC. Talks had been under way since February 1949, and the decisive impulse came on 6 June 1949, when the Spanish federation agreed to include a Canary Islands championship in the national leagues. An earlier idea for the name, Deportivo Canarias, was rejected because it referred to the whole archipelago and not to the island of Gran Canaria. The new club held its first training session on 16 September 1949 and its first match on 9 October at the Estadio Insular, against Marino FC, who were playing their last professional match. Insular had opened in 1944 as Marino's home.
The club rose quickly from the start. In its first season, 1949–50, it finished second in the Tercera División and was promoted to the Segunda División, and a year later, after finishing third in the Segunda, it reached La Liga. It was the first club in Spain to be promoted in each of its first two years of existence. The team's nickname is Los Amarillos (the Yellows), and its colours are yellow and blue.
The club's golden era began with its return to La Liga in June 1963. In 1967–68 Las Palmas finished third with 38 points, and in 1968–69 second, behind only Real Madrid, who finished nine points ahead. The top scorer of that team was José Manuel León, with 11 goals, and the club's legends also include Germán Dévora, Juan Guedes, Tonono, Paco Castellano and Gilberto I. In 1971–72 the club finished fifth and again qualified for European competition.
Second place in the league brought Las Palmas an invitation to the 1969–70 Inter-Cities Fairs Cup, its first appearance in Europe. In the first round it met Hertha BSC and went out after a 0–0 draw and a 0–1 defeat. It made its first appearance in the UEFA Cup in 1972–73 and its last in 1977–78, and in total played 10 matches in that competition: four wins, two draws and four defeats, with a goal difference of 20–16.
The club's biggest cup success came in 1977–78. Las Palmas reached the final of the Copa del Rey, in which it lost to FC Barcelona at the Santiago Bernabéu in Madrid. It remains the club's only final in the competition, and together with the runner-up place of 1969, the two results remain the greatest achievements in its history.
After the years of success came a long period of crisis. In 1991–92 the club was relegated to Segunda División B, the third tier, for the first time in its history, and that relegation is regarded as one of the worst moments in the club's history. The Estadio Insular was replaced by the Estadio Gran Canaria, opened in 2003, which is today the club's home.
Las Palmas has spent more than three decades in La Liga and is regarded by experts as the most representative club of the Canary Islands in Spanish football. Its history, from the merger of five local clubs, through the runners-up place of 1969, to the Copa del Rey final of 1978, shows that a team from an island far from Spain's football centres was able to compete with the biggest clubs.