Eleven women registered with local authorities as working members of the Sealeer Cooperative providing sexual services, said their spokeswoman, María Josí López.
"We are pioneers," she told AFP. "We are the first cooperative in Spain that can give legal cover to the girls."
The 11 active sex workers who registered in November are women in their 20s and 30s from Spain, Italy and "the East", she said, declining to elaborate.
The group is applying to register 40 more women as members.
A 42-year-old local housewife, López is not a sex worker herself but registered as a member of Sealeer to act as a voluntary representative for the women, who refuse to speak to reporters.
Like any workers' cooperative, Sealeer members declare their income and pay taxes, which entitles them to public healthcare, a pension and other benefits.
A parliamentary report on prostitution in 2007 said Spaniards spent €50 million ($68 million) a day on prostitutes, of which it estimated there were 400,000 working in the country — the latest such figures available.
In Ibiza, whose sweltering beaches draw millions of foreign tourists every year, "prostitution moves a huge amount of money in summer", in hostess bars and in private apartments, López said.
"Just as they regulate the hotels and restaurants to make sure all the workers are registered, they should also see that the girls are comfortable and legalized."
Prostitution is neither illegal nor regulated nationwide in Spain but the government in November unveiled a new civil security bill that would fine people for picking up prostitutes near schools.
Authorities in Barcelona have introduced fines for picking up prostitutes in the street and Madrid is planning to do the same.
The cooperative "is a way to give the women independence from the gangs of pimps, for women who choose to exercise this profession", said Gloria Poyatos, a former employment lawyer who advised the prostitutes in Ibiza.
"I think that something is changing. A debate in society is beginning on whether or not to regulate prostitution," said Poyatos, who is now a judge in the Canary Islands.
Prostitutes can register as workers in Belgium, Denmark, Germany and the Netherlands and in some cases claim social benefits.
Despite prostitution being tolerated in practice in Spain, the issue is divisive.
"In this case we are talking about a minority of prostitutes with supposed liberty, but in reality in most cases they do not have real freedom to choose," said Ignacio Arsuaga, the president of HazteOir, a conservative pressure group, in an email to news agency AFP.
"Regulating prostitution is harmful for victims who are exploited, for sexual slaves."