The mass kicked off with a pre-recorded video greeting by Pope Francis, rebuffing an umbrella association of groups who said the beatification would be a "political act of pro-Franco affirmation" by the Church.
"I join all the participants in the celebration with all my heart," the pope said to long applause from the thousands attending the beatification mass in the eastern coastal city of Tarragona.
Spanish media described the event as "the biggest ever beatification in the history of the Church".
Historians have estimated that about 500,000 people from both sides were killed in the 1936–1939 war. After Francisco Franco's victory, Nationalist forces executed some 50,000 Republicans. Franco's dictatorship lasted until his death in 1975.
Several thousand priests, monks and nuns were thought to have died at the hands of the Spanish republic's mainly left-wing defenders, among whom anti-Church sentiment was strong.
The Spanish Catholic Church apparently sought to sidestep the controversy by referring to the 522 to be beatified as "martyrs of the 20th century in Spain".
But Pope Francis on Sunday was more explicit, saying at the Vatican that they were "martyrs killed for their faith during the Spanish Civil War."
The umbrella association of dozens of groups supporting Franco-era victims had written to him, saying: "Under the guise of a religious act, the (Catholic) hierarchy is committing a political act of pro-Franco affirmation."
The Platform for a Truth Commission added: "You should know that the Catholic Church backed Franco's military uprising against the Spanish Republic in 1936."
The Church "considered the war 'a crusade' by backing the generals who revolted, (and) legitimized the fascist dictatorship and the fierce repression that it afflicted on the Spanish," said the letter published on Friday.
It has "forgotten the victims of Francoist repression", the letter said.
Some more progressive sections of the Spanish Catholic Church, a minority in Spain, also opposed the beatification, saying it would reopen the wounds of the past.
In addition to 515 Spaniards, three French, and a citizen each from Cuba, Colombia, the Philippines and Portugal were among those beatified, which is the last formal step before possible sainthood.
Spain's conservative government was represented at Sunday's beatification mass by the justice and interior ministers, Alberto Ruiz Gallardón and Jorge Fernández Diaz.
Nearly 4,000 family members or descendants attended the mass at an education complex, along with some 2,700 clerics, according to organizers.
The youngest of the "martyrs", Jose Sanchez Rodriguez, "was killed at age 18 against the wall of a cemetery" in Madrid at dawn on August 18, 1936, along with seven other clerics, by a group of militiamen, according to the Madrid diocese.
The oldest, Sister Aurora Lopez Gonzalez, had fled her convent near Madrid in July 1936 when it was "taken over by revolutionaries". She was executed some five months later aged 86.
The Vatican has regularly beatified Spanish Civil War victims.
In 2007, Francis's predecessor Benedict XVI staged the Vatican's largest previous beatification ceremony, involving 498 victims of religious persecution during the war.