Residential areas of detached houses were built in north and east Madrid, Spain, during the last decade of the 20th century. Because the population density in those areas is low, implementing an efficient transport system is complicated. In south Madrid in the 1960s, however, huge commuter towns developed. Some of them were linked to a suburban network at some point, whereas others were far away. The Madrid region promoted the construction of several light rail lines to resolve this issue. The lines function as extensions to the existing rail network (subway or suburban trains). The determining factors that enabled these lines to be implemented and operated successfully are analyzed. The recommendations for implementing a light rail transit system, on the basis of that analysis, are: (a) the lines should not be very long; (b) they should have a segregated right-of-way; (c) the quality of service should be good; and (d) they should be coordinated with other modes of transport. Apart from public funding, they could be funded by additional resources collected from property tax and the concessionaire company (private funding). A concessionaire consortium may comprise construction companies, transport operators, financial institutions, rolling stock manufacturers, and consultancies. Finally, the concession should be granted for a 30- to 40-year period so that private stakeholders can recover their investment.