Early years:

Margate team photo from the 1901–02 season.

Margate Football Club was founded in 1896 as an amateur club, playing friendly matches on local school grounds. In the years prior to the First World War the club played in several different amateur leagues, with little success, and played at various grounds in the Margate area before settling on a pitch at what would later become the Dreamland amusement park in 1912.

This ground became known as the Hall-by-the-Sea Ground, taking its name from a local dance hall.

Inter-war years:

After the war, Margate joined the original Kent League, but in 1923 the league suspended the team due to financial irregularities and the club promptly folded. A year later the club reformed, initially under the name Margate Town, and returned to the Kent League, still playing at Dreamland, but folded again due to heavy debts.

In 1929, the club reformed once again and moved to its present home at Hartsdown Park, leasing part of the park from the local council for conversion into a football stadium. Around this time, Margate signed a Dutch player, a highly unusual move in an era when it was almost unknown for Continental players to move to English clubs. Goalkeeper Gerrit "Gerard" Keizer, who joined the Kent club from Ajax Amsterdam, later went on to play for Arsenal.

From 1934 until 1938 Margate, by now playing in the Southern League, served as the official nursery side for Arsenal. Under this arrangement, the London club regularly loaned promising young players to Margate for them to gain match experience. Star players such as Eddie Hapgood also turned out for Margate while regaining match fitness after injuries.

In the second season of this arrangement, 1935–36, Margate reached the third round proper of the FA Cup for the first time, losing 3–1 to Blackpool after defeating Queens Park Rangers and Crystal Palace in the earlier rounds, but shortly after this the club had to step back down to the Kent League for financial reasons.