The top-ranked Swiss won the clay-court tournament last year after beating Rafael Nadal in the final, and then went on to claim his first French Open title before adding his sixth Wimbledon crown.
That win "gave me immense confidence," Federer said, and after a poor start to the clay season this year he's hoping Madrid will provide a similar spark.
"Not only did I win the tournament but I beat fellow rivals," Federer said of last year's tournament. "I had a brutal draw _ I played (Robin) Soderling here in the first round. To go on and beat (James) Blake, (Andy) Roddick, (Juan Martin) del Potro and then Rafa (Nadal), it was a great tournament for me."
He could use a similar confidence boost this time.
Federer lost to Ernests Gulbis of Latvia in his first clay-court match of the year at the Rome Masters and was then eliminated in the Estoril Open semi-finals by Albert Montanes of Spain.
However, he insisted he is not far from finding his best form.
"I'm doing the right things in practice," he said. "I'm just lacking a bit of luck at times and I'm maybe not hitting the ball as clean as I was at the beginning of the season."
He could run into Nadal in the final again this year, with the Spaniard looking nearly as invincible on clay this year as he was before knee injuries hampered him last season.
"I expected (Nadal) to come back again strong," Federer said. "For me he was never gone, for you maybe he was. He was in the same situation I had to go through last year."