At the age of thirteen, he started to compose music for the piano. A critic sent a copy of Halffter's string trio "Homenajes" to Manuel de Falla, beginning a long relationship that included composition lessons from Falla. His Sinfonietta is one of his earliest and best works; it shows the influence of Domenico Scarlatti. Later, he became more nationalistic with "Rapsodia portuguesa for piano and orchestra", composed in 1938, during the Spanish Civil War. In 1934 he became director and conductor of the Seville Conservatory of Music but, married to the Portuguese pianist Alice Câmara Santos, chose to live in Lisbon during this period up to 1954. His only pupil was the Finnish composer Ann-Elise Hannikainen, who also became his life-companion during his later life.
When Falla died in 1946, he left his opera Atlántida incomplete; Ernesto Halffter was asked to complete it. It premiered in 1962, but Halffter later revised it. The second version was completed in 1976.
He was awarded Spain's Premio Nacional de Música for composition in 1984.
He wrote music for a dozen films. Perhaps the most noteworthy is Don Quixote de la Mancha, the 1947 film version of Miguel de Cervantes's classic novel. He also adapted and conducted the music for El amor brujo (1967), based on the ballet by Falla. It was directed by Francisco Rovira Beleta, was nominated for an Oscar and features guitarist Narciso Yepes.
- Deux esquisses symphoniques pour orchestre (La chanson du lanternier; Paysage mort) (1922-1925)
- Hommages: petite suite pour trio (1922)
- Sinfonietta (1925)
- Dos canciones (1927)
- L'hiver de l'enfance (1928–34)
- Canciones del niño de cristal (1931–34)
- Canzone e pastorella for cello and piano (1934)
- Amanecer en los jardines de España (1937)
- Señora (1938)
- Rapsodia portuguesa for piano and orchestra (1939)
- Seis canciones portuguesas (1940–41)
- Cançao do berço (1940–41)
- Canto inca (1944)
- Seguidilla caselera (1945)
- Canción de Dorotea (1947)
- Fantasía española for cello and piano (1952)
- Atlàntida (completion of Falla's work: 1961; revision 1976)
- Canticum (1964)
- Psalmi (1967)
- Concerto for guitar and Orchestra (1969)
- Madrigalesca for guitar (1969)
- Homage to Salvador Dalí for trumpets, percussion, tenor, piano and mixed choir (1974)
- Pregón (1974)
- Sonatina, one-act ballet (first performed in a version for piano solo, played by José Cubiles on 16 November 1927; then in a concert version for orchestra, 11 February 1928, and finally as a fully staged ballet, 18 June 1928)