In March, 1888, William McGregor, a director of Aston Villa, circulated a letter suggesting that "ten or twelve of the most prominent clubs in England combine to arrange home and away fixtures each season." The following month the Football League was formed. It consisted of six clubs from Lancashire (Accrington, Blackburn Rovers, Burnley, Everton and Preston North End) and six from the Midlands (Aston Villa, Derby County, Notts County, Stoke, West Bromwich Albion and Wolverhampton Wanders). The main reason Sunderland was excluded was because the other clubs in the league objected to the costs of travelling to away games.

Professional football was slow to develop in southern England. In 1891 Arsenal became the first London side to turn professional. Arsenal attempted to establish a Southern League and when that failed, they joined the Football League in 1893.

In 1894 Millwall played a leading role in the creation of a Southern League. Other founder members included Reading, Luton Town, Swindon Town, Chatlam, Clapton and Ilford. Millwall won the league for the first two years of its existence.

By the 1900-1901 season the first division of the Southern League included Millwall, Southampton, Reading, Portsmouth, Tottenham Hotspur and West Ham United.

The strength of the Southern League was shown by the fact that Southampton reached the final of the FA Cup in 1900 and 1902. In both cases Southampton were defeated finalists, however, in 1901, another Southern League team, Tottenham Hotspur won the cup.

Most of the top teams in the Southern League joined the Football League over the next few years. In 1920 virtually the entire top division of the Southern League was absorbed by the Football League to become that league's new Third Division. A year later this became the Third Division South.