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El Rastro is the biggest open air flea market in Madrid. This market started officially about the middle of the 19th century. There are no official sections in the market but the artisans tend to stay beside the Plaza de Cascorro.
When: Every Sunday and public holiday between 9 am and 3 pm.
Where: The area between Plaza de Cascorro, Ribera de Curtidores, Calle Embajadores, and the Ronda de Toledo. It is within walking distance of the Plaza Mayor and the Puerta del Sol. The following web page has a map.
Caution: The Rastro is frequented by pickpockets.