There were 98.265 fewer people out of work in May than a month earlier, new figures from Spain's employment ministry show.
This comprised a drop in total unemployment of 1.97 percent on April's jobless figures.
At the same time, 134.660 more people started paying more into Spain's social security system.
The numbers show that there was "a continued trend towards slowing unemployment," said the Secretary of State for Employment Engracia Hidalgo in a statement.
May was the third month in a row that Spain's unemployment figures have fallen.
The average drop in unemployment in May has been around 54,000 in the last 15 years, El País reported on Tuesday.
The rise in the number of people paying into the social security was "powerful, clear and across the board" said the Secretary for Social Security Tomás Burgos in a statement cited by El País.
Prime Minister Mariano Rajoy had earlier flagged positive unemployment figures in May.
"The unemployment figures are going to confirm the trends we observed, (and they clearly) inspire hope," he said on Saturday.
However, some Spanish media outlets pointed out that the unemployment figures didn't look nearly as good after seasonal adjustment.
News site Infolibre highlighted the fact that 62.4 percent of the fall in unemployment could be put down to the services industry with people being contracted to work for the summer in tourism and hospitality along Spain's coasts.
The site argued that after seasonal adjustment, the total fall in unemployment numbers was only 265.
20minutoes, meanwhile, reported that 91.5 percent of the 1,283,261 contracts new contracts signed in May were temporary, while only 7.47 percent were for ongoing positions.
This was a 24.22 percent drop in the percentage of new jobs that were ongoing in May 2012, said the site.
According to the figures from the Employment Ministry, there are now a total 4.989.193 receiving unemployment benefits in the country.