A child prodigy, Albéniz was accepted, at the age of seven, as a private pupil by Antoine-François Marmontel, the celebrated piano pedagogue whose students included Bizet and Debussy. Back in Spain within a year, he gave a concert tour and eventually entered the Madrid Conservatory. He soon ran away, concertized around Spain, and in 1872 stowed away on a ship sailing for Latin America. Upon his return to Europe the following year, he entered the Leipzig Conservatory, where he briefly studied with Carl Reinecke. Soon thereafter, a patron enabled him to enter Brussels Conservatory to study piano and composition. Albéniz won the conservatory's first prize in 1879; the following year, he obtained an audience with Franz Liszt in Budapest; for a while he joined the master's entourage and continued to work on his technique as a pianist. After more wandering through Europe and South America, he settled in Barcelona in 1883, married, and began a family.

By that time, Albéniz already had a reputation as a composer of brilliant salon music for the piano. Around 1890, he met Felipe Pedrell, a prominent musicologist, composer, and collector of folk songs. Following the encounter with Pedrell, Albéniz re-examined his work as a composer, deciding to seek new inspiration in the rich musical traditions of Spain. Not yet satisfied with his craftsmanship, Albéniz moved to Paris to study with Paul Dukas and Vincent d'Indy. The restless Albéniz somehow hung on to a job teaching piano at Paris' Schola Cantorum from 1893 to 1900; then he undertook further peregrinations, all the while working on his masterpiece, Iberia. An immensely popular work, Iberia has also been transcribed for orchestra; successful orchestral versions include Leopold Stokowski's orchestration of "Fête-Dieu à Seville." Another work which gained wide popularity as an orchestral transcription is the Tango for piano in D major. Albéniz also wrote for the stage; his lyric comedy Pepita Jiménez and several other works were produced in the 1890s. He died in 1909.