The newborn princess is third in line to the Spanish throne, after her father Felipe and her elder sister, Princess Leonor.
The baby weighed 7.3 pounds, said Letizia's gynecologist, Dr. Luis Ignacio Recasens.
Accompanied by her husband, Letizia was seen entering Madrid's Ruber Internacional hospital to the north of the city by a group of journalists and photographers who had been camped outside the hospital for days.
Letizia gave birth to her first child, Leonor, in October 2005.
Under Spain's constitution, Leonor and the new princess would be overtaken in the royal line of succession if her parents go on to have a son. This is because the charter favors a first-born male even if he has older sisters.
Many in Spain have argued that this law is discriminatory and outdated, and that Leonor should be allowed to inherit as the first-born child.
Other European monarchies have in recent years bowed to egalitarian thinking and ended centuries' old pro-male bias.
In 1980 Sweden changed laws to allow women direct inheritance rights and Belgium followed suit in 1991. Norway amended male-bias laws in 1990 though Prince Haakon, who was first in line at that point, was allowed to retain his rights of succession despite having an older sister.
In January, Japan, home to one of the world's oldest and most conservative imperial systems, dropped plans to allow women to inherit the country's Chrysanthemum Throne following the birth last year of Hisahito, the first male heir in four decades.
Spain's Socialist government is expected to follow Norway's example and amend its constitution without making succession right retroactive. That is, even if the charter is amended before Prince Felipe becomes king, he — and not his elder sister Elena — would succeed to the throne on the death of King Juan Carlos.
Prime Minister Jose Luis Rodrigues Zapatero's government has said there is no urgency to changing the constitution until Felipe becomes king.
The conservative opposition Popular Party opposes constitutional reform on succession because some of its politicians suspect Zapatero may take advantage of such change to make it look like a referendum on the monarchy.
Letizia Ortiz, 34, a former television news anchorwoman, became Spain's crown princess in May 2004 when she married Felipe in a glittering royal wedding.