A Dutch meat dealer believed to be the head of the gang was arrested in Belgium and has been charged with forgery and crimes against public health, among other crimes.
After falsifying paperwork and substituting microchips used to identify the horses, the animals were slaughtered and the meat shipped to Belgium.
Spanish officials estimate that the profits from the illegal meat could reach €20m a year.
In 2013, the horsemeat scandal was exposed in Europe after Irish authorities uncovered horsemeat in products marked as beef burgers.
The operation was carried out by Spain's law enforcement agency, Guardia Civil, in coordination with the European agency Europol, involving police in Belgium, France, Italy, Portugal, Romania, Switzerland and the United Kingdom.
Horse DNA was discovered in frozen beef burgers sold in a number of British and Irish supermarkets in 2013.
Ten million burgers were taken off shelves and sales fell by 43pc.
The operation covered more than half a dozen European countries.
In a statement released today, Europol said: "In the summer of 2016, [Spain's] Guardia Civil's Environmental Protection Service initiated Operation Gazel after unusual behaviour was detected in horsemeat markets".
It found that horses that were in bad shape, too old or simply labelled as "not suitable for consumption" were being slaughtered in two different slaughterhouses.
"Those animals came from Portugal and various places in the north of Spain".
Then, the meat was sent to Belgium, one of the biggest trading market of horse meat to the European Union.
This marked the start of an investigation to find the origin of the contamination.
"From there he maintained business interests in activities that he controlled in northern Europe", said Spanish police.
"This person managed this network from the shadows using men of confidence in each of the territories in which it was present".
The animals' identification was forged by modifying microchips and documents, police learned after the crackdown in their operation. Europol added that it had seized bank accounts, properties and luxury cars in the course of the investigation.