The uncontrolled fire in the municipality of Mentrida, around 50 kilometres (31 miles) southwest of the capital, prompted local authorities to urge nearby residents to stay at home and shut their windows.
The wind blew the smoke over Madrid, where AFP journalists saw ash falling from a thick cloud of orange and grey-coloured smoke, with observers gathering in the street to take pictures.
Madrid's civil protection service advised people to avoid staying outdoors and to use surgical face masks to avoid inhaling the ash, while part of a main motorway leading to the city was closed.
More than 150 firefighters were deployed on the ground and in the air to extinguish the fire that began at around 3:00 pm (1300 GMT), according to the forest fire information service of the central Castilla-La Mancha region.
Scientists say human-induced climate change is increasing the intensity, length and frequency of the extreme heat that fuels forest fires.
Several regions of Spain have been under heat warnings this week, with temperatures peaking at 39 degrees Celsius (102 degrees Fahrenheit) in Mentrida on Thursday, according to national weather agency AEMET.
According to the European Forest Fire Information System, around 500 fires destroyed 300,000 hectares (741,300 acres) of vegetation in Spain in 2022, a record for the continent.
More than 25,000 hectares have burned so far this year.
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