The protest came after the anti-bullfighting lobby successfully managed to obtain a ban on a famous festival which ended with a bull being speared to death.
The regional government of Castilla y Leon in June banned the killing of bulls at town festivals, in a move that targeted the northern region's controversial Toro de la Vega festival where horsemen chase a bull and spear it in front of onlookers.
The Madrid protesters held up banners saying: "Bullfighting, the school of cruelty" and "Bullfighting, a national shame".
"Bulls feel and they suffer," said Chelo Martin Pozo, a 39-year-old from Seville who had come to Madrid for the rally.
"Bullfights are a national shame and if they represent me, then I am not Spanish," she said.
Madrid resident Azucena Perez marched outside the parliament holding up a banner saying: "Bullfighting and the Bourbons should be im museums," referring to the country's royal family.
"I think our laws should prohibit the torture of animals as a form of entertainment," the 36-year-old said, admitting, however, that her grandfather was a big fan of the corrida.
A number of protest rallies in favour of the controversial past-time have been held recently, such as one in the eastern city of Valencia, a major bullfighting city, which drew thousands of people in March.
Valencia, Spain's third largest city, meanwhile, has banned the tradition of setting bulls loose with lighted torches attached to their horns called "bous embolats".
Leading Spanish daily El Pais this week said that events involving bulls that 1,736 bullfights had been staged in the country last year, or 132 less than in 2014.
They see bullfighting as an art that is an integral part of Spanish culture, like flamenco.
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