The World Economic Forum published the biennial rankings on Wednesday, saying that Spain's move to the top position was "a positive sign for the country's nascent recovery".
"With beautiful heritage sites throughout the country, it boasts top marks for its cultural resources, and also scores highly for business travelers with a significant number of international conferences," the report said.
The country was rated first globally for cultural resources, fourth for supporting tourists' online searches for entertainment and fourth for infrastructure.
Spain jumped to first place this year up from fourth place in the last ranking in 2013, and up from eighth place in 2011.
Still, the report indicated that Spain had some "room for improvement".
"The low rank for business environment (100th) reflects red tape related to construction permits and an inefficient legal framework, while the labour market is still assessed as somewhat rigid (113th) and sees a mismatch between workers’ rewards and productivity (125th)," the report explained.
Earlier this year, Spain broke two records for the number of international tourists in January and February reaching 6.5 million and for tourist spending reaching €6.6 billion.
In Wednesday's tourism ranking, Spain beat out Switzerland, which took first place in 2013 and sank to sixth place this year.
France took second place after Spain, followed by Germany in third place, the United States in fourth and the United Kingdom in fifth.
The World Economic Forum rated 141 countries across 14 criteria to determine how well each place provided economic and societal benefits in the travel and tourism sector.
The new and growing middle class in countries like China are having more of an impact on tourism in Spain and across the world, the report said, as well as Western seniors and the Millennial generation.
Spain also saw a surge in tourists from Mexico and Brazil.
These two countries had their own successes in tourism, making it into the top 30.
"The diversity in the top 30 shows that a country does not have to be wealthy to have a flourishing tourism sector," said Roberto Crotti, economist at the World Economic Forum, in a statement.
"But many countries should still do more to tackle travel and tourism challenges, including visa policies, better promotion of cultural heritage, environmental protection and ICT [information and communications technology] readiness. This in turn would drive economic growth and the creation of jobs."