Groundbreaking on the third Madison Square Garden took place on January 9, 1925. Designed by the noted theater architect Thomas W. Lamb, it was built at the cost of $4.75 million in 349 days by boxing promoter Tex Rickard, who assembled backers he called his "600 millionaires" to fund the project. The new arena was dubbed "The House That Tex Built." In contrast to the ornate towers of Stanford White's second Garden, the exterior of MSG III was a simple box. Its most distinctive feature was the ornate marquee above the main entrance, with its seemingly endless abbreviations (Tomw., V/S, Rgrs, Tonite, Thru, etc.) Even the name of the arena was abbreviated, to "Madison Sq. Garden".

The arena, which opened on December 15, 1925, was 200 feet (61 m) by 375 feet (114 m), with seating on three levels, and a maximum capacity of 18,496 spectators for boxing. It had poor sight lines, especially for hockey, and fans sitting virtually anywhere behind the first row of the side balcony could count on having some portion of the ice obstructed. The fact that there was poor ventilation and that smoking was permitted often led to a haze in the upper portions of the Garden.

In its history, Madison Square Garden III was managed by Rickard, John S. Hammond, William F. Carey, General John Reed Kilpatrick, Ned Irish and Irving Mitchell Felt. It was eventually replaced by the current Madison Square Garden.

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