More than 250 representatives from 17 nations are taking part in the three-day exercise, which includes the mock deactivation of a radioactive "dirty bomb" and search for radiocative material, the interior ministry said in a statement.
The goal is to "prepare to prevent a terrorist attack with nuclear or radioactive material by intervening and neutralising it, and protect the civilian population if needed."
The exercise is being held at a police training centre in Avila, some 150 kilometres (90 miles) west of the Madrid.
It is part of the Global Initiative to Combat Nuclear Terrorism which was launched by US President George W. Bush and then Russian President Vladimir Putin at a G8 summit in July 2006.
The initiative now compromises 75 signatory nations, including Spain which joined in April 2007.
In 2004 Spain suffered one of Europe's deadliest attacks when bombs planted by Islamic extremists angered by the country's participation in the US-led invasion of Iraq exploded on packed commuter trains, killing 191 people.