Police moved in on the group last week as they received delivery of a cache of weapons originating in eastern Europe that included several Kalashnikov rifles fitted with silencers, a 357 magnum revolver, two shotguns and a long-range rifle with telescopic lens.
During the raid officers also seized electronic detonators, explosives and an anti-tank grenade launcher, as the gang received delivery of an arms shipment transported in a hired transit van.
Investigators believe the squad were sent to Spain to collect debts and settle scores on behalf of Colombian drug cartels while also trying to forge an alliance with Mexican traffickers based in Spain's eastern city of Valencia.
It was the first time police had smashed a squad apparently sent to set up a permanent base in Spain, said Andres Dieguez, head of the Spain's Central Organised Crime Brigade.
Previously individual hit men had been sent over from Colombia to settle scores and protect their business in Spain, the main cocaine gateway into Europe, before returning to South America.
The gang were also in possession of containers of acid, which they are suspected of using to decompose the bodies of their victims and to ensure their identification would be difficult.
Among those arrested were the suspected leader of the cell, who went by the alias "Conejo" meaning rabbit and his right hand man "El Monstro", police said. They have not released the real names of those arrested.
The first was wanted by Colombian police and was involved in a feud with a rival gang of assassins in Colombia, believed to be responsible for carrying out a hit on his brother six months ago and his nephew earlier this month.
"El Monstro" - the monster - was wanted on an international arrest warrant for other murders in his home country.
According to local media reports some members of the gang were former members of the paramilitary group, United Self-Defence Forces of Colombia (AUC).
The gang is also suspected of touting for work from other crime organizations for which they offered to kidnap, maim or kill, in return for 50 per cent of the money owed by their target.
Among their targets was the sister of a drug felon jailed in Spain who had outstanding debts to a cartel in Colombia. They were ordered to kidnap the woman until the convict could arrange payment of what he owed.