It was formed by 12 clubs as an alternative to the Football League, which had begun in the 1888–89 season, also with 12 member clubs. The Alliance covered a similar area to the League, stretching from the English Midlands to the North West, but also further east in Sheffield, Grimsby and Sunderland. Some of the clubs which founded the Alliance had played in The Combination the year before, but that league collapsed as a result of the disarray and lack of organization. The president of the Football Alliance was John Holmes, also the president of The Wednesday who were the first champions winning fifteen games out of twenty-two.
At the end of the Alliance's first season, when Stoke dropped out of the Football League, the Alliance accepted them as a new member. The following year, Stoke and Darwen, another Alliance club, were accepted into the League, taking its membership to 14 clubs.
In 1892 it was decided to merge the two leagues, and so the Football League Second Division was formed, consisting mostly of Football Alliance clubs. The existing League clubs, plus three of the strongest Alliance clubs, comprised the Football League First Division.