Now, the club from the Uruguayan capital of Montevideo operates at a more modest level, despite still enjoying domestic domination.
On the continental stage, Peñarol have failed to even get out of the Copa Libertadores group phase since they were beaten finalists in 2011 – the only time a Uruguayan side has reached the trophy match since Nacional were champions in 1988.
But now, thanks to a high-profile fan, the club has been thrust back into the international limelight.
Even more so as France striker Antoine Griezmann, the most prominent supporter of the “Coalmen”, will line-up opposite Uruguay in the World Cup quarterfinals on Friday.
Griezmann is a lover of Uruguay, and has adopted a range of typical traits from the South American country ever since becoming spellbound by teammates at his formative club in Spain, Real Sociedad.
There he was coached by Uruguayan Martín Lasarte, who alongside teammate Carlos Bueno transmitted the love for their homeland to the young and impressionable Griezmann.
“It was with him (Bueno) that I first started watching Peñarol matches,” Griezmann said at a recent World Cup press conference.
“It’s a nationality I love, people that I love – I have a bit of their style: I never give up, I give everything.”
Now, the French star drinks mate, eats grilled meat, and spreads dulce de leche on his tartines, just like Uruguayans.
He’s an official Peñarol supporter and has even posted an online video of himself singing one of the club’s chants.
Despite German and Portuguese origins, he describes himself as “half-Uruguayan,” and even speaks Spanish with a Uruguayan accent.
Although currently plying his trade with Spanish side Atlético Madrid, Peñarol president Jorge Barrera believes the fresh-faced 27-year-old will one day grace the black and yellow jersey of the club.
He said the club’s doors “are open when he wants to play for us and I’m sure one day he’ll wear the shirt of Peñarol, even if it’s just for a friendly”.
Given Griezmann’s stature in football – he has been linked with moves to Barcelona and Manchester United – he would fit in well at a club with such a rich history.
Peñarol were kings of the world between 1960 and 1966. They won the Copa Libertadores three times, the Intercontinental Cup twice, beating Benfica and Real Madrid, while also claiming their domestic crown five times.
Such were their former glories that Peñarol were designated by the International Federation of Football History and Statistics as the “best South American team of the 20th century”.
Five-time Copa Libertadores winners in total – twice more than their bitter Montevideo rivals Nacional – their record has been bettered only by Argentine giants Independiente and Boca Juniors.
In their homeland, Peñarol are known for the very traits Griezmann is hoping to emulate: that never-say-die attitude.
“Peñarol won two of their Copa Libertadores triumphs with a last-minute goal,” said journalist and writer César Bianchi, author of a book called: “To Peñarol. Passion that never dies”.
It’s not just a characteristic of Peñarol but one the whole country shares, according to French specialist in Uruguayan football, Jérôme Lecigne.
“What’s impressive (in Uruguay) is that from the youngest age, Uruguayans talk football,” he said.
While Griezmann’s passion for Peñarol is unquestionable, how the clubs’ supporters will feel about him after Friday’s clash remains to be seen.