The fireman was one of 14 people arrested during a protest which turned ugly. He was released on Thursday but will now face charges of 'defying authority', Spain's El Mundo newspaper reported.
Some 200 colleagues of the young man gathered outside a Madrid court on Thursday to protest against his "unjustified" arrest, saying he had been working at a time.
He had reportedly been putting out a rubbish container that had been set alight in a cordoned-off area when anti-riot police demanded access to the zone.
He denied that request and was later taken into custody.
A union spokesperson told reporters on Thursday the incident was part of ongoing tensions between police and the firefighters.
Wednesday's protests in Madrid were held in support of demonstrations in Burgos against a proposed street revamp — protests which have garnered national attention.
Police have arrested 40 people since the demonstrations began on January 10th, as protesters burned garbage containers, smashed windows and tore down security barriers.
Burgos mayor Javier Lacalle has suspended work on the redesign, which opponents argue is a waste of money that could be better spent on social services during an economic crisis that has left one in four people in Spain out of work.
The plans for Calle Vitoria in Burgos include reducing the lanes of traffic to just one each way instead of two, adding a bike lane and green spaces and replacing free parking spaces with a paid underground car park.
Lacalle argues the project will improve the quality of life of the 170,000 residents of the city, known for its dark-stone old town and castle and a statue of the medieval adventurer El Cid.