Mohammed Jahangir Alam, a Bangladeshi who had been living in Britain on a temporary visa, was convicted in absentia in 2010 for the alleged sexual assault, and sentenced to 14 years in jail.
"The fugitive was tracked down at his work place, a restaurant where he was eventually detained," Spanish police said in a statement.
They added he had fake ID on his arrest in Santa Cruz on the island of Tenerife, part of Spain's Canaries off the coast of Africa. It was unclear exactly when he was detained.
A Spanish police spokeswoman told AFP he had fled Britain in 2008.
Mohammed Jahangir Alam, believed to be 32, was arrested as part of Operation Captura, a joint campaign by Spanish and British police to detain people in Spain who are suspected of committing crimes in Britain.
Last week, as Britain's National Crime Agency (NCA) and Crimestoppers, a police-backed British charity that appeals for help in solving crimes, marked the operation's tenth anniversary on Spain's southern Costa del Sol. They said 76 fugitives had been apprehended out of 86 publicised.
Like Mohammed Jahangir Alam, he also figured on Operation Captura's top ten list of most wanted fugitives in Spain.
Others on the list are accused of crimes ranging from murder, violent assault to drug trafficking and money laundering.
Matthew Burton, head of the NCA's UK fugitives unit, said many British fugitives are attracted to Spain, where it is estimated 800,000 to a million Britons live as expatriates.
"It's been a magnet," he said.
"It's easy as a fugitive to blend in and conceal yourself."
He said the highest number had been found in Spain, but Britons who had allegedly committed crimes also fled to Cyprus, Portugal and Italy.