On 18 February 2004, Figo earned his 100th cap in a 1–1 friendly draw with England at the Estádio Algarve, playing as captain despite regular skipper Fernando Couto being in the starting line-up. Later that year at the European Championship on home soil, he captained the side after Couto was dropped. He announced his retirement from international football following the Euro 2004 final upset-defeat by Greece due to an alleged rift between him and national coach Luiz Felipe Scolari, although this was denied. In June 2005, he reversed his decision and returned for the 2006 World Cup qualifying wins against Slovakia and Estonia under Scolari.
Figo captained the squad during the 2006 World Cup, leading the team to the semi-finals. With three wins, Portugal finished top of their group and qualified for the knock-out rounds with Mexico. They advanced past the Netherlands in the last 16, and defeated England on penalties in the quarter-final. Figo did not take part in the shootout, having been substituted for Hélder Postiga. In the semi-final, Portugal was beaten by France courtesy of a penalty from his former club-mate and French captain Zinedine Zidane. This was Portugal’s best finish in 40 years. The third-place playoff caused some controversy as Figo did not start; Pauleta captained the team in his place. However, Portugal fell behind 2–0 to hosts Germany and Figo replaced Pauleta in the 77th minute, who handed him back the captain’s armband to cheers from both Portuguese and German fans. Although Germany scored another goal shortly after Figo’s entrance, he ended his final cap for his country on a high note by setting up Nuno Gomes to head in an 88th-minute consolation goal, thus passing his number 7 jersey down to his successor, Cristiano Ronaldo.
Despite having no trophies to show for the “Golden Generation,” Figo managed to captain the team to their best World Cup performance since the Eusébio era in 1966, as well as helping Portugal to their best-ever result in the UEFA European Championship until they won it in 2016. He finished his international career with 127 caps and scoring 32 goals, and held the record until June 2016 for most appearances with the Portugal national team; he is also Portugal’s fourth-highest all-time goalscorer.