The controversially titled Castrillo Matajudíos, or ‘Jew Killer town' voted to finally rid itself of its dark past last year and published its new name in the official state bulletin in June.
The tiny town near Burgos is now known as Castrillo Mota de Judíos, 'hill of Jews' and held an official ceremony on Friday to install the new name signs.
The ceremony was attended by representatives from Spain's Jewish and Sephardic communties as well as by Israel's ambassador to Madrid, Daniel Kutner.
After receiving approval from most of its 56 residents, the town hall then had to confirm that the name change "had historical justification" and that it was not too similar to the name of any other existing town.
A massacre of Jewish people is thought to have taken place near the town in 1035 and another massacre happened in the village itself in 1109.
Mota de Judíos was reportedly its original name, referring to the Jewish inhabitants who first settled the town.
It is believed that at some point a scribe renamed it ‘Jew Killer', perhaps amid intense anti-Semitism and persecution of non-Christians during the Spanish Inquisition which lasted roughly between 1478 and 1834.
The first mention of the town being called ‘Jew Killer' was reportedly in 1623.
Spain only recently granted dual citizenship rights to the descendants of Sephardic Jews who were expelled from the country during the Inquisition in 1492, more than 500 years ago.
The newly christened Mota de Judios is not the only Spanish town with an unusual name, for example Matagorda (‘Kill Fatty') in Andalusia, or Malcocinado (‘Undercooked') in Extremadura.