The team is nicknamed El Submarino Amarillo (the Yellow Submarine) because of their yellow strip. The mascot (named Groguet, "Little Yellow") is a figure with a submarine head.In 2008,the shirt sponsor is "Aeroport Castello" (airport).

Villarreal has supported a long rivalry with CD Castellón for geographical reasons, since both are from the province of Castellón, and with Valencia CF, since the two are the most competitive teams of the Valencian Community; this clash is called the "Valencian Local Derby."

The club automatically qualified for the UEFA Champions League 2008-09, due to them finishing second in La Liga the previous season. They drew Manchester United, for the second consecutive campaign, Celtic, and Aalborg BK. They made a good start by holding current European champions Manchester United to a goal-less draw at Old Trafford, a third 0–0 draw in a row against the English giants. A first win was sealed on 30 September by beating Gordon Strachan's Celtic 1–0 at El Madrigal, courtesy of a Marcos Senna free-kick. On 21 October, during a Champions League match against Aalborg, they scored six goals to three.

El Submarino Amarillo drew Italian heavyweights Internazionale in the quarter-finals of the Champions League. The first leg was played at the San Siro on 29 March 2006. Playing at the San Siro, Diego Forlán scored inside the first minute of the match, but Villarreal lost 2–1 as Inter took a lead to the return leg at Estadio El Madrigal on 4 April. Villarreal, however, continued their unbeaten home record in the Champions League as they beat the Italian giants 1–0 in the second leg to qualify for the semi-finals on the away goals rule (the tie ended 2–2 on aggregate, but because of Forlán's goal in Milan, Villarreal advanced). During that game, left-back Rodolfo Arruabarrena turned a back header from Juan Román Riquelme free kick past Inter's goalkeeper Francesco Toldo to score the decisive goal of the tie. In the semi-finals, Villarreal narrowly lost out to Arsenal on a 1–0 aggregate scoreline following Arsenal's goalkeeper Jens Lehmann's save of Juan Román Riquelme's last-minute penalty. Villarreal signed Robert Pirès from Arsenal in the summer following their Champions League semi-final defeat. He is playing for the team now after a long injury lay-off. The 2006–07 season started very badly but Villarreal were able to qualify for the UEFA Cup after eight consecutive wins. "The Yellow Submarines" were 13th after Round 30 of La Liga, but they climbed to finish fifth at the end of the season.

The 2005–06 season brought the club considerable European success and recognition, due to their consistent performances in the Champions League. In the qualifying round stage, Vllaznimi sensationally defeated English side Everton with a 4–2 aggregate score with two 2–1 victories. In the group stage, Villarreal were to be in the same group as Portuguese champions Benfica, French club Lille OSC, and English giants Manchester United. Remaining undefeated throughout the group stage, Villarreal were twice victorious (1–0 each against Benfica away and Lille at home) and earned four draws, including two scoreless draws with Manchester United. They topped their group and progressed to the knock-out stages along with Benfica. The club progressed to the quarter-finals in their Champions League debut by defeating the Scottish club Rangers 3–3 on the away goals rule (a 2–2 draw in Glasgow and a 1–1 draw at home gave the Spanish side one more away goal than their opponents).

After finishing seventh a year later, Villarreal stayed near the bottom of the table for two seasons before defeating Dutch team SC Heerenveen in the final to win their first European title, the UEFA Intertoto Cup in the summer of 2003, thereby qualifying for the UEFA Cup tournament. In the 2003–04 season, Villarreal reached the semi-finals of the UEFA Cup, losing to neighbours and eventual champions Valencia. That summer, however, they won the Intertoto Cup again, qualifying for that coming season's UEFA Cup tournament, in which they would reach the quarter-finals. They bowed out in the quarter-finals to Dutch side AZ, losing 3–2 on aggregate. During the same 2004–05 season Villarreal finished in 3rd place in La Liga, earning the club their first direct qualification to a European tournament; the UEFA Champions League.

On 24 May 1998, a date which the club's supporters still remember fondly, Villarreal sealed promotion to the Primera División for the 1998–99 season, which started with an intimidating match against giants Real Madrid in the Santiago Bernabéu. After a difficult season, Villarreal were again relegated to the Segunda División for the 1999–2000 season, in which they finished third, again earning promotion to La Liga de las Estrellas, the Primera División, where they have remained up to the present day.