Transportation from Madrid Airport

The taxi is going to run you around 30 euro. You could take the Aero City van for about 20 euro, or the Airport Express bus to the Cibeles stop (first stop in town) and a taxi from there to your hotel. Airport Express is 5 euro pp, and the taxi from there to Sol is another 5 or so.

Don't know what you mean by best. Certainly the most convenient. It is not that far so the cab fare should be less than 20E - IF I remember correctly. Unfortunately the subway requires two changes.

We took the metro. The cost, as I recall, is 1,60 plus another euro airport supplement (that may have been the cost using the ten ticket card). If you have only a carry-on (rather than heavy or multiple bags) and your valuables safely tucked away in a moneybelt, the metro is plenty convenient - you don't have to worry about downtown traffic. I think you have one transfer between the airport and Puerto del Sol. If you have multiple/heavy bags and/or aren't confident in your ability to avoid being targeted by thieves, a taxi may be a good investment. Barcelona has maybe the worst reputation for thieves but I thought Madrid was noticeably worse.

The metro with airport supplement is 4.50-5.00 euro. The books of ten tickets are 18 euro. There is no advantage to taking a taxi over taking the Aero City van. The van takes you to the door of your hotel and is 10 euro cheaper.

Thanks to all who have replied. I am leaning towards a taxi since there are 4 adults and our luggage. I hope there are taxis that have room for 4 adults, so we can split the costs. I hear there are a lot of gypsies in Spain, but I hope to travel smart.

Nancy, do you have to make reservation for the aero city van?

You can, but you don't have to. Their desk is across from the farmacia (neon sign of a green cross, to the right as you exit arrivals area). You can just walk up and make arrangements then.

Taxi is the best way but not the cheapest. It will cost you about 30 €. If your airline destination is terminal T-4, it is easy to take the local train.
2,40-2,50 € one way trip. The train station is located in level -1 or -2 just below the arrivals lounge. All trains are bounded to Chamartin, Nuevos Ministerios and Atocha stations. You have to change trains in Madrid to get to Sol station. I think the easiest interchange station is Nuevos Ministerios. The train from the airport stops in platform 4. When you get off the train there, walk 1 minute to platform 8; from there, all trains stops next station: Sol. Total trip will not take you more than 45 minutes including transfers. If you arrive into terminals T-1, T-2, T-3, or even T-4, the yellow express bus is a good option. It is bounded to Atocha rail station and you will have to get off at the penultimate stop located in Plaza de Cibeles. From there, you have an esay 10-15 minute walk to any place in Puerta del Sol or Gran Vía areas. The bus fare is 5 euro, and the trip to Cibeles will take 25-30 minutes, but without rush hour traffic. I do not recommend taking the metro from the airport to get to Sol area. The fare is 5 euro, you have to change metro lines twice and the interchange stations are not confortable for travellers with lots of luggage. Metro option it will take you about one hour. I hope you enjoy your visit to Madrid.

Victor, thank you for your detailed response. We will probably take the taxi, since we are going to have a very long day and will probably be very tired. We leave next week and are getting very excited about our trip to Spain. Thanks to all who have taken the time to respond.