The Wales international arrived at the Bernabeu from Tottenham Hotspur for a reported £85m in September 2013 and he went on to play a key role as Los Blancos won the Champions League and the Copa del Rey.
His performances have resulted in him being included on FIFA's list of nominees, along with six of his Madrid teammates.
"I'm honoured to be included on the shortlist for the #BallondOr this year among so many world class players. Good luck to everyone," the 25-year-old wrote on Twitter this afternoon.
Bale has scored 27 goals in 56 appearances for the European champions.