The number of Spaniards registered as unemployed fell by 13,538 during February and just over 300,000 on year earlier in figures that will provide a huge boost to the ruling Popular Party.
It means that the number of registered unemployed across Spain is now about 4.5 million.
"It was the largest year on year reduction in unemployment since 1999," said a government statement.
Engracia Hidalgo, the secretary of state for employment, insisted that the data released on Tuesday "clearly demonstrated the positive trend in the labour market" that is consistent with the improving economic situation.
In his state of the nation address last week, Prime Minister Mariano Rajoy told parliament
that 2015 would see the creation of half a million jobs for Spaniards.