Islands of Spain. The Balearic island and the Canary Islands are the two major island groups in Spain. Balearic Islands lies on the Mediterranean Sea, where as the Canary Islands lie on the Atlantic Sea. Spain is surrounded by water bodies on all the four sides.he Balearic Island in Spain is known as the Mediterranean Paradise and is primarily divided into two parts, one in the north and the other in the south west. The northern part is known as Gimnesias, which comprises of Menorca.