MTW divides the strategic map among a large number of factions. There are three types of factions: major playable factions (any one of which the player chooses to control), major unplayable factions, and minor factions. Major factions, listed below, can control several provinces, have hereditary rulers, and generally act in an organized manner. They have a faction flag and distinctive color. Minor factions control a single province, usually raise only low-quality troops, and rarely act with any kind of coordination. They represent minor states or kingdoms (such as Scotland, Navarre, or Portugal), the side in a civil war not holding the throne, and rebels and bandits. The initial extent of each major faction's territory depends on the starting period of the game—Early (1087), High (1205) or Late (1321), reflecting the historical state of these factions over time. A fan-made mod called MTW: Super Mod adds 27 factions, along with making all previously unplayable factions available, and makes it so some provinces and factions are playable only during certain periods. The mod also includes new provinces (such as Iceland).
The Almohads (faction colour orange) are the Berbers of Iberia and North Africa, one of the three Muslim major factions in Medieval. They have strong units early, and have access to Berber Camels and Almohad Urban Militia, which are useful in combating horse cavalry.
The Byzantines (faction colour purple) are the major Orthodox faction. Events in Byzantine history are also used to divide the periods covered in the game: the historical sack of Constantinople by the Venetians during the Fourth Crusade marks the end of the Early period in 1204, and the fall of the same city to the Ottoman Turks in 1453 marks the end of the game.
The Byzantines have a greater number of unique units available to them than any other faction except the Turks. Several of these unique units, such as Kataphraktoi, Trebizond Archers, and Varangian Guard, give this faction a significant advantage early on, but as time advances to the High and Late periods these units become increasingly outdated, with some units becoming unavailable.
The Danes (faction colour white) are a Catholic faction. They are well suited for an early trading strategy (thanks to their unique Viking longboat units), while aided in battle by their unique Viking infantry units. They cannot launch crusades. While they are in a rather weak standing early on they have the ability to become strong further in the game
The Egyptians (faction colour dark yellow) are a Muslim faction, representing the Fatimid and successive dynasties in Egypt and other Near Eastern provinces that number among the wealthiest and most profitable lands on the MTW map. Egypt can marshal some unique Mamluk and other desert-dwelling units, giving them an advantage when fighting in the Middle East and North Africa.
The English (faction colour red) are a Catholic faction with good provinces and two unique unit types (longbowmen and billmen), as well as sharing hobilars (early light cavalry) with the French. The game begins in 1087, marking the death of England's Norman king William the Conqueror. Their special crusade unit is the Knights Templar which they share with the French.
The French (faction colour blue) are a Catholic faction. All their unit types are shared with at least one other faction, however several French provinces have rich farmland (improved income from farming) and give a bonus to particular unit types trained there, such as Chivalric Knights and Crossbowmen.
The Germans (faction colour black), who represent the Holy Roman Empire, are a large Catholic faction. They have access to some unique and special units, including the supremely heavy Gothic knights (which they share with the Italians). Unlike the other faction leaders, the Holy Roman Emperor is elected, which can be useful — usually the death of an heir-less leader spells disaster, but the Germans simply elect a new one. However, local lords have little loyalty to the Emperor, so civil war is more likely. Their special crusade units are the Teutonic Knights.
The Italians (faction colour dark green) are a Catholic faction representing the city states of northern Italy, such as Venice and Genoa. They have access to Gothic Knights (which they share with the Holy Roman Empire), as well as early access to high quality Italian spearmen. Their special crusade unit is the Knights Hospitaller.
The Polish (faction colour maroon) are a Catholic faction. They cannot launch crusades. Polish Retainers are on a par with Feudal Knights, and have much lower building requirements, but they are unavailable in the Early era if the game has been patched to v1.1 or later.
The Orthodox Russians (faction colour light blue) only become available in the High and Late periods, developing from the non-playable people of Novgorod in the Early game. This represents the historical decline of the Kievan Rus' after the fall of Constantinople to the Fourth Crusade (which marks the start of the High period), and the rise to dominance of the Rus' people of the mercantile Republic of Novgorod, far to the north of the diminished Kievan royal court. Their royal unit, the Boyars, are one of only two royal units in the game that are mounted and armed with both bows and swords.
The Castilian Spanish (faction colour bright yellow) are a Catholic faction. They have access to high quality cavalry units, such as javelin-armed Jinetes and Lancers, which are among the most powerful assault cavalry in the game. The Spanish are also the non-player faction who launches the most crusades. Their special crusade unit is the Knights of Santiago.
The Turks (faction colour light green) are a Muslim faction representing the Seljuk and Hungarian Turks. Even in the early period, despite facing a superior Byzantine Empire, they have a fine selection of cavalry which are useful for classic Turkish warfare. They become very powerful later in the game, as they gain access to high quality Janissary and Ottoman units. They are also, along with the Russians, one of the two factions to have bow-armed royal bodyguard units, the Sipahi of the Porte, although these only become available in the Late age.
- The Aragonese begin with a single province and their faction colour is light pink; their units are identical to those of the Spanish. This faction becomes playable in Viking Invasion. They are a Catholic nation who are able to 'crusade'. In the late period, they also own Sicily.
- The Golden Horde appear abruptly from the east, usually disrupting all eastern factions. They come with powerful forces, comprised largely of unique units. Their faction colour is gold.
- The Hungarians start in the boundaries of Greater Hungary. Their faction colour is light red. This faction becomes playable in Viking Invasion. They are a Catholic faction but are unable to crusade, like the Danes and the Poles.
- The people of Novgorod are essentially the unplayable Early period predecessors of the Russians. Differences between the two are otherwise minimal. Their faction colour is that of the Russians — light blue.
- The Papacy is a Catholic faction. Its political power extends far beyond its territories to all Catholic factions. Excommunication is a constant threat to any Catholic ruler who is too aggressive to fellow Catholic factions, and an immediate reality to any who invade Papal territory. For a Catholic ruler, excommunication goes beyond bearing a bad label, as the loyalty of the population of zealous Catholic provinces towards their excommunicated ruler significantly decreases, causing uprisings and rebellions in provinces that are not occupied by large standing armies or governed by strong and favourable leaders. New Crusades cannot be launched, and existing Crusading armies dismantle and their military might is disbanded. Defeating the Pope means that a faction can establish a puppet ruler, but the true Pope will make many repeated attempts to assemble an army and regain his sovereignty, unless his former lands are kept under watch by large standing armies. On the other hand, maintaining a peaceful foreign policy with the Pope and Catholic factions, as well as waging war on non-Catholic factions or Catholic factions that have fallen out of favour with the Pope, can often result in monetary rewards for "services rendered to the Church." The Papal faction colour is cream, and their armies are made up of only the units common to all Catholic factions.
- The Norman Sicilians have the basic Catholic unit roster, and are a crusading faction recruiting Knights Templar. Like the Italians, the Sicilians often employ their naval and seafaring advantage when expanding into other territories. Their faction colour is dark grey. This faction becomes playable in Viking Invasion.
- The Swiss emerge in the Late period if Switzerland is not held firmly and loyally by a major faction. Their royal unit, Swiss armoured pikemen, is arguably the strongest infantry unit in the game. Their faction colour is grey.
- The Burgundians occasionally emerge in the later period of the game and occupy the province of Burgundy. Military aggression outside of Burgundy is rare for this faction, and any role they play in Late period political events is minor compared to the other unplayable factions. They are a light blue colour and are led by a Duke; their army's units are identical to those of the French.
All of these factions can be made playable by editing the game's data files, but this is not endorsed by the game developers and can have adverse effects if done improperly. In particular, the Papacy is heavily scripted, leading to crashes if it is not computer-controlled. Despite this editing data files is fairly popular due to the new options it provides.