In late 1909, the Italian Darracq cars were selling slowly, and the Italian partners of the company hired Giuseppe Merosi to design new cars. On 24 June 1910, a new company was founded named A.L.F.A. ("[Società] Anonima Lombarda Fabbrica Automobili", "Anonymous Lombard Automobile Factory") on 24 June 1910, in Milan (initially still in partnership with Darracq). The brand is known for sporty vehicles and has been involved in car racing since 1911.
The first non-Darracq car produced by the company was the 1910 24 HP, designed by Merosi. A.L.F.A. ventured into motor racing, with drivers Franchini and Ronzoni competing in the 1911 Targa Florio with two 24-hp models. In August 1915, the company came under the direction of Neapolitan entrepreneur Nicola Romeo, who converted the factory to produce military hardware for the Italian and Allied war efforts. In 1920, the name of the company was changed to Alfa Romeo with the Torpedo 20–30 HP the first car to be so badged.
In 1921, the Banca Italiana di Sconto, which backed the Ing. Nicola Romeo & Co, went bankrupt and the government needed to support the industrial companies involved, among which was Alfa Romeo, through the "Consorzio per Sovvenzioni sui Valori Industriali". In 1925, the railway activities were separated from the Romeo company, and in 1928 Nicola Romeo left. In 1933, the state ownership was reorganized under the banner of the Istituto per la Ricostruzione Industriale (IRI) by Benito Mussolini's government, which then had effective control. The company struggled to return to profitability after the Second World War, and turned to mass-producing small vehicles rather than hand-building luxury models. In 1954, it developed the Alfa Romeo Twin Cam engine, which would remain in production until 1994. The Istituto per la Ricostruzione (IRI), the state conglomerate that controls Finmeccanica sold the marque to the Fiat Group in 1986 due to the marque being unprofitable.
Alfa Romeo has competed successfully in Grand Prix motor racing, Formula One, sportscar racing, touring car racing, and rallies. It has competed both as a constructor and an engine supplier, via works entries (usually under the name Alfa Corse or Autodelta), and private entries. The first racing car was made in 1913, three years after the foundation of the company, and Alfa Romeo won the inaugural world championship for Grand Prix cars in 1925. The race victories gave a sporty image to the marque, and Enzo Ferrari founded the Scuderia Ferrari racing team in 1929 as an Alfa Romeo racing team, before becoming independent in 1939. It has had the most wins of any marque in the world.