Asier del Horno's early goal gave Spain victory in an ill-tempered friendly.
He headed home after 10 minutes in a game marred by angry scenes on the pitch and racist chants aimed at Ashley Cole and Shaun Wright-Phillips.
Paul Robinson saved a penalty from Spain's Raul following a foul on the same player after 24 minutes.
And England's Wayne Rooney was hauled off after 41 minutes to spare him a red card after being booked and clashing with several Spain players.
Aside from all the turmoil, England coach Sven-Goran Eriksson will have learned little from an abject and disjointed performance which contained few chances.
England had captain David Beckham back in their ranks - but they were a goal down inside 10 minutes.
The old England failing at set-pieces surfaced again, when a corner caused confusion and Del Horno headed home from eight yards.
Spain were outclassing England, but they were handed a very fortunate opportunity to double their lead after 24 minutes.
Goalkeeper Robinson produced a perfectly-timed challenge to rob Raul, and was stunned to see referee George Kasnaferis point to the spot.
England were furious, but justice was done as Robinson dived to his left to save Raul's penalty.
The rest of the half degenerated into a spiteful affair on and off the pitch.
England defender Cole was the target for clear racist chanting, while Rooney stoked up the temperatures with an astonishing display of petulance and aggression.
The Manchester United teenager was fortunate to escape without a yellow card for a wild challenge on Joaquin.
And seven minutes before the interval he was cautioned for a dangerous push on Spain goalkeeper Iker Casillas which risked seriously injuring the Real Madrid star as he tumbled off the pitch.
One more wild challenge on Carlos Marchena prompted Eriksson to humiliatingly haul off the youngster for his own protection and prevent a red card, sending on Alan Smith.
Cole was then booked for a tackle on Michel Salgado, although in his defence it was likely the Arsenal defender was in a furious mood after being subjected to disgraceful treatment from the crowd.
England began the second-half more brightly, with Smith heading narrowly over.
But Spain soon resumed control, and England captain Beckham was substituted holding his ribs on the hour.
Wright-Phillips was his replacement, and he too was greeted by racist chanting from the Madrid crowd.
Miguel Angel Angulo, making his Spain debut, had the chance to make his mark as a substitute when he was clean through after 77 minutes, but he blazed wildly over.
Spain: Casillas, Salgado, Marchena (Ibanez 46), Juanito, Del Horno,
Joaquin (Romero 80), Alonso (Orbaiz 69), Xavi, Reyes (Angulo 57), Torres (Guti 46), Raul (Luque 46).
Subs not used: Canizares.
England: Robinson, Gary Neville, Ferdinand (Carragher 62), Terry (Upson 65), Ashley Cole (Defoe 78),
Beckham (Wright-Phillips 60), Butt, Lampard (Jenas 60), Bridge, Rooney (Smith 42), Owen.
Subs not used: James,
Kirkland, Phil Neville, Hargreaves.
Referee: George Kasnaferis (Greece)