From its formation in 1960 to 1979, the competition was contested over a two legged tie, with a playoff if necessary until 1968, and penalty kicks later. During the 1970s, European participation in the Intercontinental Cup became a running question due to controversial events in the 1969 final, and some European Champions Club' winner teams withdrew. From 1980 until 2004, the competition was contested over a single match held in Japan and sponsored by multinational automaker Toyota, which offered a secondary trophy, the Toyota Cup.
All the winning teams were regarded by worldwide mass media and football's community de facto as "world champions" until 2017 when FIFA officially (de jure) recognized all of them as club world champions with the same status to the FIFA Club World Cup winners. The first winner of the cup was Spanish side Real Madrid, defeating Uruguayan side Peñarol in 1960. The last winner was Portuguese side Porto, defeating Colombian side Once Caldas in a penalty shoot-out in 2004.
According to Brazilian newspaper Tribuna de Imprensa, the idea for the Intercontinental Cup rose in 1958 in a conversation between the then president of the Brazilian FA João Havelange and French journalist Jacques Goddet. The first mention of the creation of the Intercontinental and Libertadores Cups was published by Brazilian and Spanish newspapers on October 9, 1958, referring to Havelange's announcement of the project to create such competitions, which he uttered during a UEFA meeting he attended as an invitee. Prior to this announcement, the reigning European champions Real Madrid C.F. had already played two intercontinental club competitions, the 1956 Pequeña Copa del Mundo de Clubes and the 1957 Tournoi de Paris. According to a French video record of the highlights of the latter match, between Real Madrid C.F. and CR Vasco da Gama, this was the first match ever dubbed as "the best team of Europe vs. the best team of South America". It was described as "being like a club world cup match" by the Brazilian press, as was a June 1959 friendly between Real Madrid and Torneio Rio – São Paulo champions Santos FC, which Real Madrid won 5-3.
Created in 1960 at the initiative of the European confederation (UEFA), with CONMEBOL's support, the European/South American Cup, known also as the Intercontinental Cup, was contested by the holders of the European Champion Clubs’ Cup and the winners of its newly established South American equivalent, the Copa Libertadores. The competition was not officially endorsed by FIFA, and in 1961 they refused to allow it tok take place unless the participants gave it a "private friendly match" status. However, the competition went on regardless, with the endorsement of UEFA and CONMEBOL; both federations consider all editions of the tournament to have been official, and include them in their records. It was the brainchild of UEFA president Henri Delaunay, who also helped Jules Rimet in the realization of the inaugural FIFA World Cup in 1930. Initially played over two legs, with a third match if required in the early years (when goal difference did not count), the competition had a rather turbulent existence. The first winners of the competition were Spanish club Real Madrid. Real Madrid managed to hold Uruguayan side Peñarol 0-0 in Montevideo and trounce the South Americans 5-1 in Madrid to win. After the victory of Real Madrid in the first edition of the Intercontinental Cup, Barcelona newspaper El Mundo Deportivo hailed the Madrid team as the First World Champion Club, on the one hand pointing out that the competition "did not include Africans, Asians and other countries part to FIFA", on the other hand expressing doubt that these regions might present football of the same high quality of Europe and South America. The Spaniards titled themselves world champions until FIFA stepped in and objected; citing that the competition did not include any other champions from the other confederations, FIFA stated that they can only claim to be intercontinental champions of a competition played between two organizations. Peñarol would appear again the following year and come out victorious after beating Portuguese club Benfica on the playoff; after a 1-0 win by the Europeans in Lisboa and a 5-0 trashing by the South Americans, a playoff at the Estadio Centenario saw the home side squeeze a 2-1 win to become the first South American side to win the competition.
In 1962 the tournament grew more in worldwide attention after it was swept through the sublime football of a Santos team led by Pelé, considered by some the best club team of all times. Os Santásticos, also known as O Balé Branco (or white ballet), which dazzled the world during that time and containing stars such as Gilmar, Mauro, Mengálvio, Coutinho, and Pepe, won the title after defeating Benfica 3-2 in Rio de Janeiro and thrashing the Europeans 2-5 in their Estádio da Luz. Santos would successfully defend the title in 1963 after being pushed all the way by Milan. After each side won 4-2 at their respective home legs, a playoff match at the Maracanã saw Santos keep the title after a tight 1-0 victory. The competition had attracted the interest of other continents. The North and Central America confederation, CONCACAF, had asked, unsuccessfully, to participate. Milan's fierce rivals, Internazionale, would go on to win the 1964 and 1965 editions, beating Argentine club Independiente on both occasions. Peñarol gained revenge for their loss in 1960 by crushing Real Madrid 4-0 in aggregate in 1966.