Guests at the H10 Costa Adeje Palace Hotel in Tenerife have been locked down after a visiting Italian doctor tested positive for coronavirus.
Hundreds of guests at the Canary Islands property were initially told to stay in their rooms as medical tests were carried out.
The doctor is reportedly from the Lombardy region, where Italian authorities are battling an outbreak.
Global cases of the virus have passed 80,000, the vast majority in China.
The hotel has been closed, with security forces preventing people from leaving, Spanish media reported.
The doctor, who had been staying at the hotel with his wife, tested positive on Monday and has been placed in isolation at the University Hospital Nuestra Señora de Candelaria.
He will undergo a second test to confirm the virus.
Italy has the largest number of cases in Europe, 231, and announced a series of drastic measures over the weekend to try to contain the outbreak.
In the regions of Lombardy and Veneto, a lockdown is in place in several small towns.
For the next two weeks, 50,000 residents will not be able to leave without special permission.