José Manuel García Margallo announced the decision to close the iconic language institute explaining that there was no need to have such a thing on "what is considered to be Spanish territory".
The Cervantes Institute was opened on the Rock in 2011 following the historic Cordoba agreement forged by the tripartite forum between the UK, Spain and Gibraltar.
But the agreement and subsequent tripartite talks were shelved when the conservative government of Mariano Rajoy came to power at the end of 2011.
"To have a Cervantes (Institute) there is a contradiction in terms,” Margallo told a parliamentary commission on Wednesday in reference to Spain´s sovereignty claims over the tiny territory that sits at its southwestern tip. He questioned the need for opening a center designed to teach Spanish on what "was considered national territory".
“Moreover, everyone there speaks Spanish save the apes,” he quipped, referring to Gibraltar´s colony of Barbary macaques.
His comments will likely fuel tensions ahead of a planned meeting in Madrid next week between Margallo and UK foreign secretary, Philip Hammond.
Last week Gibraltar´s Chief Minister Fabian Picardo delivered a speech in Madrid in which he called for the tripartite talks to be resumed, at least on an ad hoc basis.
Gibraltar was ceded to the British by Spain under the 1713 Treaty of Utrecht but Spain still claims sovereignty over the territory and surrounding waters.