It is the first time there has been full-year economic growth in Spain since 2008 when a labour-intensive property bubble collapsed, pushing millions of people out of work.
Growth accelerated in the fourth quarter to 0.7 percent from 0.5 percent in the third quarter, according to provisional figures from the National Statistics Office.
The provisional figures are in line with the conservative government's estimate for economic growth in 2014.
The government predicts the Spanish economy, the eurozone's fourth-largest, will expand by 2.0 percent in 2015.
Economy Minister Luis de Guindos said Monday the economy could grow by as 2.5 percent this year if oil prices and the euro stay low.
The statistics office will publish final Gross Domestic Product figures for 2014 at the end of February when it will outline which sectors posted the strongest growth.
The Spanish economy has benefitted from an uptick in consumer demand and a recovery in the construction sector, the Bank of Spain said in its latest economic bulletin.
Spain has also benefitted from the arrival of a record 65 million visits from foreign tourists last year, which gave its key tourism sector a boost.
Exports were also up by 5.8 percent during the first 11 months of 2014 over the same year-ago period, according to the economy ministry.
The jobless rate slid to 23.7 percent in 2014, down from 25.7 percent in the previous year, but was still one of the highest levels in the developed world.