The populist party formed an alliance with the Popular Party to jointly govern in Castilla y León.
Spain's far-right Vox party has entered a regional government for the first time after reaching an agreement with the conservative Popular Party (PP).
The two parties will together govern in the region of Castilla y León for the first time, PP officials announced on Wednesday.
Vox said it would hold the vice-presidency of the regional government after finishing third in February's election. While PP picked up the most votes, they fell short of a majority needed to form a one-party administration.
The northwestern region of Castilla y León, located close to Madrid, is Spain's largest but sparsely populated.
Vox has become the third most popular party in Spain's national parliament, despite controversial policies and views on migration, gender violence and diversity.
Its votes in the regional parliaments of Madrid and Andalusia -- the most populous of Spain’s 17 regions -- have been key to supporting PP administrations or passing conservative legislation.
But until Thursday, Vox had never been admitted into leading regional positions.
According to the parties, Vox party members will also take the speaker position in the Castilla y León assembly and at least three regional ministerial positions.
Critics say those positions will become a platform to amplify the nationalist party's “hate speech” and allow it to significantly influence policy.
“Today is a bad day for Spain’s democracy,” said Adriana Lastra, an MP with the Socialist (PSOE) party and close aide of Prime Minister Pedro Sánchez.
Lastra accused the opposition Popular Party of forming a pact of shame” with the far-right.
The conservative party is due to hold a new leadership election in April following political infighting that led to the resignation of party chief Pablo Casado.
The PSOE and PP have taken turns in power for much of the past four decades, but the EU country's political landscape has become increasingly fragmented.
The decision to unite with Vox could see further coalition deals between the conservatives and far-right in other Spanish regions.
PM Sánchez said a political alliance featuring the far-right was "very bad news for Spanish democracy".
Elections in Andalusia are due to be held in December at the latest, municipal elections in May next year and in several regions, and general elections in Spain in November.