Drivers hired for rides using their privately owned cars via the UberPOP application "lack the administrative authorisation to carry out the job, and the activity they perform constitutes unfair competition," the court ruled.
The Spanish court also ordered telecom companies and payment service providers to block Uber, which both reserves taxis and processes payments via smartphone applications.
The ruling was a "precautionary measure" adopted while the court examines a case brought by the Madrid Taxi Association. Similar legal challenges from traditional taxi services have proliferated elsewhere, as the cheaper Uber option has lured passengers away.
In a communiqué responding to the judgement, Uber said it "will continue to respect Spanish law," but vowed to examine all its options to deal with ruling it described as "sudden and unusual".
Founded in 2009 in California, Uber has become a popular transportation alternative to traditional taxis.
Uber charges a commission for each ride, but fees charged by the service's drivers are generally significantly lower than normal taxis.
Riders are also able to rate service provided by individual drivers - who in turn rate the behaviour of their customers. Individuals on either side of the transaction whose ranking fall below a certain level are banned from the scheme.
Uber last week announced its valuation at $40bn (€32bn), twice its worth six months ago. It is now operating service in more than 200 cities across 45 countries.
But legal clashes and controversy have begun clouding Uber's horizon.
Dutch judges on Monday banned UberPOP service from taking bookings in the Netherlands, and threatened the company with fines of up to €100,000 ($123,000) in case of infringement, saying unlicensed drivers were breaking the law.
In contrast to its initial response to the Spanish ruling on Tuesday, a defiant Uber reacted to the Dutch decision Monday with a statement saying it "will continue to offer UberPOP."
Monday's decision "is simply the first step in a long-running judicial battle," the San Francisco-based company added.
A court in Paris is to decide on Friday whether Uber's services constitute unfair competition to traditional taxi drivers.
Authorities in Denmark and Norway have also filed complaints against Uber.
In Germany, a court in Frankfurt threw out an injunction against Uber in September.
Uber was able to resume operating legally in Germany pending a final ruling on a complaint by the taxi federation.
The city government in New Delhi on Monday banned Uber from operating in the Indian capital after a passenger accused one of its drivers of rape.
Source: AFP, via I-Net Bridge
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