Fabra, the former president of the conservative Popular Party in Castellón province, entered Spain's Aranjuez prison on Monday after a judge gave him five days in which to voluntary enter a facility of his choice.
He will spend four years at the prison after being found guilty of tax fraud in November 2013. A supreme court appeal was later overturned in July.
"Nobody likes to see him (Carlos) in this position, but in the end it shows justice finds everyone," said Valencia's president Alberto Fabra, also with the Popular Party, on the politician's imprisonment.
At his November 2013 trial, Fabra was found not guilty of influence peddling and blackmail. He was, however, sentenced to four years in prison after he and his ex-wife were found to have €3.2 million ($4.1 million) in unexplained earnings from 1999 to 2004, Spain's El Mundo newspaper reported.
Fabra was also found guilty of failing to pay €1 million in tax.
His conviction ended a decade-long legal saga in which eight judges were unable to make charges stick.
It is said Fabra ruled Castellón province like his own private fiefdom, and he is the man behind the white elephant that is Castellón airport, which cost €150 million ($200 million), but which has yet to receive a single flight.
The former politician — who always wears sunglasses because of a childhood accident which left him one-eyed — also claims to have won the lottery seven times in the last ten years. Those wins bagged him €2.2 million, he said.
But some experts argue fake lottery winnings are a convenient way to launder money.
Fabra is the second high-profile public figure in Spain to go behind bars in recent weeks after lengthy legal battles. Spanish singer Isabel Pantoja, known as "Spain's widow" after her bullfighter husband's death, recently began serving a two-year prison term for money laundering after a seemingly endless series of last-ditch court appeals were rejected.