Levante UD was originally founded in 1909 as Levante Fútbol Club, taking their name from the "Levante" beach in La Malvarrosa, and was one of the pioneering football clubs in Valencia. Local rivals Valencia CF were not formed until 1919; however, another club, Cabanyal FC, had been playing in the city since 1903.

The team's earliest games were played at La Platjeta, near the docks on a plot of land owned by a perfume entrepreneur. Its next ground was also near the port area, and the club gradually began to become associated with the working class. In 1919 the side played Valencia for the first time, losing 0–1 – the game marked the inauguration of the recently formed new ground at Algirós; in 1928 Levante FC won their first trophy, the Valencian Championship.

1909 also saw the birth of Gimnástico Fútbol Club, who originally played at Patronato de la Juventud Obrera, being then named Universitario Fútbol Club. By 1920, the team had become Real Gimnástico Club de Fútbol, after being granted royal patronage by Alfonso XIII. In 1920 Gimnástico also reached the final of the Campeonato de Valencia, but the game was never played; in 1930, with the emergence of the Second Spanish Republic, they dropped the Real from their name.

In 1934–35 both Levante and Gimnástico made their debut in the second division, when the league was expanded from ten teams to twenty-four. In 1935 the former won the Campeonato Levante-Sur, a competition that featured teams from Valencia, Murcia and Andalusia, and subsequently reached the semi-finals of the Spanish Cup, consecutively beating Valencia and FC Barcelona before losing to eventual runners-up CE Sabadell FC.