Women in bloodstained death camp uniforms waved Israeli flags and men dressed as German officers posed with guns at Monday's regional carnival in the small town of Campo de Criptana in the Castile-La Mancha region, around 90 miles southeast of Madrid.
The Israeli Embassy in Spain said in a tweet that it condemned "the vile and disgusting representation trivializing the Holocaust" and "making fun of the six million Jews killed by the Nazis."
The Auschwitz Memorial museum tweeted: "Hard to describe: memory upside-down, far beyond vulgar kitsch, without any relevance, without reflection & respect."
The El Chaparral Cultural Association, the carnival troupe from nearby Las Mesas that organized the Holocaust-themed part of the parade, apologized in a statement on Instagram to anyone who had been offended and said it had canceled further parades it had planned in the region.
"An erroneous image of our club has been disseminated that, really, is not what we intended," it said. "We wanted to transmit a message of consideration and respect.
"We are against the genocide against the Jewish people, for whom we feel great admiration and respect and to whom we present our apologies."
The City of Campo de Criptana said in a statement that the association had promised "a tribute to the millions of people who unjustly died in the extermination that took place during World War II in Germany."
The city authorities added: "Once we saw the representation, we share the criticisms produced. If the initial objective was to commemorate the victims, it is clear that this has not been achieved."