FK Iskra was founded in 1919, under the name RSK Sloga Danilovgrad. Since 1929, the team played under the name RSK Zmaj, with their first-ever performance in Montenegrin Football Championship on season 1933-34.
After the World War II, the team started to play under the name FK Iskra. First significant success, FK Iskra made with promotion to Montenegrin Republic League 1948-49. Another historical success, FK Iskra made in summer 1956. After playoff games against FK Bokelj, the team from Danilovgrad gained their first-ever promotion to Yugoslav Second League (1956–57), but finished as a last-placed team. Next year, the team was dissolved after the financial troubles, but it was refounded in 1959.
On season 1969-70, FK Iskra won the champion title in Montenegrin Republic League and gained new promotion to Yugoslav Second League. This time, they spent two seasons in Second League, among some of well-known national sides as FK Budućnost, FK Sutjeska or NK GOŠK. On 28 November 1971, FK Iskra made historical win against neighbouring Podgorica's and Montenegrin strongest side FK Budućnost (1:0).
Until the middle of nineties, FK Iskra played only in third and fourth division, without significant successes. On season 1993-94, FK Iskra made huge successes, with the 'double' on Republic level. The team from Danilovgrad became a champion of Montenegrin Republic League and, for the first time in history, title of Montenegrin Republic Cup winner. That gained them promotion to Yugoslav Second League 1994-95 and the very first performance in Yugoslav Cup. After poor performance, FK Iskra finished as 19th team in Second League, so were relegated to the third-tier competition. In 1994–95 FR Yugoslavia Cup, FK Iskra made surprise in the first leg, with victory against First league member FK Sloboda (2:0). But, in the Round of 16, FK Iskra was eliminated by Yugoslav title-holder FK Partizan (0-3; 0-10). During the next period, FK Iskra played between Yugoslav Second League and Montenegrin League. In second tier, team from Danilovgrad participated on season 1996-97, and from 2000 to 2003.
Following Montenegrin independence (2006), FK Iskra played in Second and Third League, but first notable successes came after 2013. On season 2013-14, FK Iskra won the champion title in Third League. Next year, after the hard struggle with FK Dečić, team from Danilovgrad became a champion of Second League. With that result, FK Iskra gained historical, first-ever promotion to Montenegrin First League.
On their debut in the First League (season 2015-16), FK Iskra finished at 10th position, but remained a member of top-tier after the playoffs against FK Bratstvo (6-0; 2-2).
FK Iskra plays its home games at Braća Velašević Stadium, whose capacity is 2,500 seats. Stadium is built on the Zeta riverbank, at the centre of town. After the last reconstruction, capacity of stadium is 2,500 seats.