1796: The First Real Election. When George Washington announced that he would retire from office, he set the stage for the nation's first two-party presidential campaign.
From the site:
The first signs of such factionalism appeared early in Washington's presidency. On one side were the Federalists who yearned for an American society and national government established on the British model. Skeptical of the growing democratization of the new nation, the Federalists desired a centralized national government that would have the strength both to aid merchants and manufacturers and to safeguard America's traditional hierarchical society.
By 1792, Secretary of State Thomas Jefferson and Congressman James Madison--both, like Washington, from Virginia--had taken steps to fashion an opposition party. Jefferson became the acknowledged leader of the new Anti-Federalists, a group soon known as the Democratic-Republican Party because of its empathy for the struggling republic that had emerged from the French Revolution of 1789. This party looked irreverently upon the past, was devoted to republican institutions, sought to give property-owning citizens greater control over their lives, and dreamt of an agrarian nation in which government would be small and weak.