Before you start

Legal residence in Spain (TIE for non-EU, or the EU citizen registration certificate for EU nationals)
Empadronamiento (town-hall registration) certificate, usually issued within the last 3 months
A foreign licence that is still valid AND was obtained before you became a legal resident in Spain
For non-EU holders: confirm your country is on the DGT list of canje agreement countries before you start

Step-by-step

1
Identify your route: register (EU), canje (agreement country), or test (no agreement)
EU/EEA licences are valid while in force; you only act after 2 years of residence. Non-EU holders from a country with a bilateral agreement (UK, Japan, South Korea, Argentina, Colombia, Brazil, Switzerland, Morocco and many others) do a canje. Holders from countries with NO agreement — the US, China, India and Australia among them — cannot exchange and must sit the full Spanish test. Check the official 'países con convenio' list before doing anything else.
OnlineWho: All foreign licence holdersDay 1 — decide before the 6-month clock runs
2
Get the medical/psychotechnical fitness report (psicotécnico)
Visit an authorised driver medical centre (Centro de Reconocimiento de Conductores) in Madrid for a short vision, reflex and health check. The centre issues an 'Informe de Aptitud Psicofísica' and submits it electronically to the DGT. It is valid for 90 days, so do it close to your application. Required for both a canje and the Spanish test route.
In personWho: Anyone exchanging or testing (not needed just to drive on a valid EU licence)About 30 minutesRoughly €30-50 (paid to the centre)
3
Canje route: apply online or book a DGT appointment (cita previa)
Holders from agreement countries can now start the canje online via the DGT Sede Electrónica, uploading documents and paying the fee, then attending ONE in-person visit at a Madrid Jefatura Provincial de Tráfico to surrender the original licence. You can still do the whole thing in person by booking a cita previa. Your foreign licence is withdrawn and you get a provisional Spanish permit; the definitive card arrives by post.
OnlineWho: Non-EU holders from an agreement countryProvisional same day; definitive card in roughly 1-1.5 monthsDGT fee (Tasa II.3) €28.87
4
No-agreement route: enrol in an autoescuela and pass the Spanish test
If your country has no agreement (US, China, India, Australia, etc.), once the 6-month grace period ends you must obtain a Spanish licence from scratch: register with a driving school, pass the theory exam (teórico, available in English at the DGT), pass the practical road test (práctico), and pass the medical exam. Madrid's Jefatura Provincial de Tráfico handles the exams via cita previa.
In personWho: Holders from countries with no canje agreementTypically 2-6 months including lessons and exam slotsDGT exam fee €94.05 plus autoescuela fees of several hundred to ~€1,000

Documents you’ll need

Valid foreign driving licence (original + photocopy), obtained before you became resident; sworn translation if not in Spanish
Passport and Spanish residence document (TIE, or EU registration certificate)
Empadronamiento certificate (recent, typically under 3 months old)
Informe de Aptitud Psicofísica (medical report) and a recent passport photo; proof of the DGT fee payment

Things most newcomers don’t know

The 6-month clock for non-EU drivers starts at residency, not arrival — and there is no extension.

Many newcomers assume their home licence is fine for the first year. In fact a non-EU licence is only valid for 6 months from the date you become a legal resident; after that, driving on it is treated as driving without a valid licence, which can void your car insurance in an accident.

Source: DGT / HealthPlan Spain

Canje only exists if Spain has a bilateral agreement with your country — otherwise no amount of paperwork avoids the exam.

The UK (post-Brexit), Japan, South Korea and most Latin American countries can exchange car/moto licences with no test. But the US, China, India and Australia have NO agreement, so their residents must pass the full Spanish theory and practical test from scratch — a common and expensive surprise.

Source: DGT — países con convenio

Your foreign licence must have been issued BEFORE you became a resident.

A licence obtained after you were already legally resident in Spain is not exchangeable, even from an agreement country. People who get a quick home-country licence after moving find the canje rejected and are pushed onto the full test route.

Source: DGT / Expat Andalucia

EU/EEA drivers don't need to do anything for years — but the 2-year register/renew rule still catches people.

An EU/EEA licence is valid while in force, so there's no urgency. The trap is the no-expiry or very-long-validity licence: after 2 years of residence Spain requires it to be registered or renewed under Spanish rules, and missing this quietly makes it non-compliant.

Source: DGT / administracion.gob.es

Common mistakes to avoid

Letting the 6-month non-EU grace period lapse — you then cannot legally drive and your insurance may not cover you.
Assuming a US, Chinese, Indian or Australian licence can be swapped — there is no agreement, so the full Spanish test is mandatory.
Doing the medical too early: the psicotécnico report is only valid for ~90 days, so a slow application can force you to repeat (and re-pay for) it.
Trying to canje a licence obtained after you became resident, or without empadronamiento — both get the application rejected.