"We are talking about thousands of Chinese citizens, mainly poor families who were robbed of their modest savings and which led some victims to commit suicide," national police commissioner Eloy Quiros told a news conference.
The gang would allegedly contact people by telephone in China, pretending to be neighbours, friends or family members and warned them of fraud scams.
In later calls member of the gang would pretend to be police investigating the scams and would convince victims to deposit money in bank accounts run by the ring to help the authorities in their investigation.
Police said they dismantled 13 call centres run out of large houses in upscale neighbourhoods around Madrid and the eastern cities of Barcelona and Alicante.
+200 detenidos, 20 registros, miles de víctimas y 16mill de € estafados con fraude telefónico en una macrooperación policial con 600 agentes pic.twitter.com/FsMbKoOqHn— Policía Nacional (@policia) December 14, 2016
"In each call centre a large number of operators would work - in some cases up to 50 in the same building - in great secrecy, without interruption and rest," police said in a statement.
Over 600 officers took part in the operation carried out on Tuesday in cooperation with Chinese authorities, who alerted Spanish police in July that many Chinese nationals were falling victim to scam telephone calls made from Spain.
Police said all of the suspects who were detained were Chinese nationals who arrived in Spain as tourists and then stayed in the country.
Chinese immigrants make up the fifth biggest foreign community in Spain with almost 170,000 people as of 2015, according to the national statistics institute.