Spanish police have arrested two suspected arsonists in the north-western Galicia region, where 64 forest fires are raging.
Three people have died in the fires, many of which are near houses. Hundreds of firefighters have been deployed, along with water-bombing aircraft.
Officials said the situation was "critical" around Rianxo.
Northern Portugal and Catalonia, in north-eastern Spain, are also struggling to contain fires.
The Spanish authorities say most of the fires, raging since last week, were deliberately lit. Many were started on wooded slopes near residential areas.
The fires have engulfed several thousand hectares of land.
Galicia's premier, Emilio Perez Tourino, said the situation was difficult, but under control.
Plea for vigilance
A curtain of black smoke can be seen from the centre of the historic medieval city of Santiago de Compostela, the AFP news agency says. About a dozen fires are blazing within 2km (one mile) of the city.
More than 1,000 hectares (2,471 acres) of land was ravaged by fire at Ventallo in Catalonia, where on Sunday the highway to France was temporarily closed.
Spanish Environment Minister Cristina Narbona urged people to denounce arsonists to the authorities so that their crimes did not go unpunished.
She said some of the fires could have been started by forestry workers angry at not being drafted over the summer by the regional firefighting brigades.
"There's a lot of money in putting out fires," Reuters news agency quoted Ms Narbona as saying.
In the past, similar fires were blamed on property developers, trying to clear land. Last year Spain passed a law banning immediate rebuilding on scorched land.
This year's drought has severely hit reservoirs in Spain.
The water reserves now stand at 45% of their capacity, or 1% down on their level last year, which was the driest ever recorded in Spain, the Spanish news agency Efe reports.
Portugal is also suffering from a spate of forest fires and the country is on orange alert, the second highest level.
In the north of the country, residents of Valongo, near Porto, were reported to be very frightened as flames were approaching their houses.
Another fire, at Estremoz in the south, was said to be under control.
Police are investigating the possibility that the blaze, which has ravaged some 4,000 hectares (10,000 acres) of eucalyptus forests, was started deliberately.
So far this year 17 people have been arrested in Portugal for starting fires, AFP news agency reports.
In the past three years, Portugal has lost 870,000 hectares (2,149,817 acres) of forest to fires.
I don't see fire from my house but the sky is grey (although there are no clouds) and it smells like fire. Yesterday at the beach we had to leave as the wind changed and the thick column of smoke started moving lower. The sun was red and could be looked at, as if there was an eclipse. The sea had red glitter. The nearest fires are about 2km from here. There's such a feeling of sadness, anger and powerlessness.
Claudia Diaz, Portonovo (Pontevedra, Spain)
The sky has been covered with smoke from the forest fires for about 3 days now. The smell of the fires and the ashes travel for miles. We live with the forest behind our house and there is a large fire now just over the ridge.
Sally Wills, Pontevedra, Galicia
I live in Catalonia and have family in the Galician town of Rioxian close to the major fires. Though they are fine they are quite confined, as the surrounding area is sealed and communications are difficult. Fear of the fires spreading are our main concern, as such an isolated area is difficult to evacuate and we fear the limited communications could be cut at any time.
Andy Williams, Barcelona
Galicia is one of the greenest areas in Spain, beautiful and full of vegetation. It is being considered as one of the biggest disasters in Spain's recent history, similar to the Prestige oilspill.
Richard Naveiro, Santiago Spain
I've been in Spain all my life - it's one of the most beautiful places I've found all over the world. It's unfair that this fire is destroying parts of it.
Dorothy Donovan, Manchester(England)