The rank of knight commander bestowed by the Order of Civil Merit is one of the highest honours given by the Spanish king to foreign nationals for their extraordinary contribution to politics, culture and society.
The knighthood was bestowed on Ebrahim, now a politician, by the Spanish Ambassador in Pretoria, Juan Sell.
"We are delighted that one line in your distinguished CV will now be associated with Spain's recognition and appreciation," Sell said at the award ceremony in Pretoria.
He has also achieved international recognition for peace-brokering efforts, especially in Sri Lanka.
Also Read
Currently Ebrahim is a parliamentary counsellor to President Jacob Zuma.
"His Majesty the King of Spain has given this honour to a highly deserving freedom fighter who sacrificed a lot for freedom, peace, justice and human rights," Zuma said in a statement after the award.
Ebrahim said he was humbled and surprised by the honour.
"This is an unexpected honour at this stage in my life, and I am humbled by the recognition given to me. I always operated as part of a collective and saw myself as a foot soldier of the ANC," Ebrahim said.
On Bastille Day earlier this month, the French government bestowed a knighthood on Ahmed Kathrada, who was a close confidante of Nelson Mandela, both while they were together on Robben Island for more than two decades and after Mandela became the first democratically-elected President of South Africa.
Other recipients of the Order of Civil Merit this year included Ritu Beri, the renowned Delhi fashion designer who counts former US President Bill Clinton and Prince Charles among her clients; and Fazle Hassan Abed, founder of the Bangladesh Rehabilitation Assistance Committee, the largest developmental NGO in the country.