There is only one direct train service between Madrid and Lisbon each day, and it is an overnight sleeper train, taking around 9 hours, and called the Lusitania Trainhotel, operated by Renfe. There is a daytime alternative to this journey, but it involves two changes, and actually takes longer than the sleeper train.
If you are travelling from elsewehere in Europe, it may also be worth considering the Sud Express, which links the French border with Lisbon via Irun in Spain. This journey is a little bit more interesting in terms of landscape.
Lusitania Sleeper Train
The Lusitania or Trainhôtel is a high quality sleeper train linking Spain and Portugal. Onboard, there are three classes of accommodation; Gran Class, Preferente and Tourist T4 Class. There is a restaurant and bar/buffet car which serves breakfast and dinner.
Pets may be transported onboard the train, as long as an entire compartment is booked. Small animals and guide dogs may travel for free. One bicycle per person is allowed, provided that it is folded and in a bag.
Gran Class:
The highest quality accommodation onboard offers passengers a private washbasin, shower and toilet in each compartment, as well as complimentary toiletries, magazines and internal telephone. Dinner and breakfast served in the restaurant car are included in the price of the ticket. Passengers may also take advantage of access to the Club Lounge at Madrid Chamartin Station.
Preferente:
Preferente passengers benefit from a private washbasin, as well as complimentary toiletries and use of an internal telephone. Breakfast is included in the price of the ticket. Passengers may also take advantage of access to the Club Lounge at Madrid Chamartin Station.
Tourist T4 Class:
Tourist Class accommodation has a private washbasin in each compartment, along with complimentary toiletries.