The National Statistics Institute said the number of unemployed Spaniards fell by 12.4% to 4.78 million last year, thanks to a strengthening economy.
In the fourth quarter the rate dropped to 20.9% of the workforce, compared with 21.2% three months earlier.
The figures, which are better than predicted, are at their lowest level since mid-2011.
The economic recovery pushed the number of unemployed people down by 678,200 for the whole year.
But there is concern that much of the growth depends on short-term jobs
The data showed almost twice as many temporary posts were created in 2015 than permanent ones.
Vincenzo Scarpetta, a  political analyst at Open Europe in London, said: "If the economic cycle starts going less well, those jobs could start to evaporate."
Economists fear that the inconclusive election, which has yet to result in a government, could delay much needed reform of the labour market.
Spain has suffered a double-dip recession that pushed unemployment to just under 27% at the end of 2013.
Retail sales grew 3.6% in 2015 as a whole, which is the biggest rise in 15 years.
A fall in the active workforce also helped the drop in the unemployment rate in the fourth quarter, reflecting the flow of workers going abroad and inactivity among the long-term unemployed.
Spanish unemployment figures have experienced their biggest annual fall but unemployment remains at over 20%.