Samuel Martin Martin, 27, the priest of two small parishes in the central province of Toledo, posted images of himself posing in grey underpants and said he was available for sex sessions with women and couples for 120 euros an hour.
Calling himself Hector, the priest described himself in an online advertisement as: "Heterosexual man for women and couples. Real photos. Well hung (15cm) to give you pleasure and happiness."
The scandal has made headlines across Catholic Spain where newspapers reprinted the photo and text from the advertisement. "I am open to everything except sadism. Hotels and private addresses. 24 hours. You won't regret it, I will give you pleasure like never before," it said.
Mr Martin confessed to parishioners during a recent mass that he had misused their donations and asked for forgiveness.
He had served less than a year as parish priest at the two villages of Totanes and Noez, which have a combined population of fewer than 1000 people.
The Archbishop of Toledo has launched an investigation and confirmed only that Mr Martin had been dismissed for "financial irregularities detected in the parish".
It is alleged that he spent up to 17,000 euros (£15,000) to fund his addiction to sex and pornography.
The revelations have come as a severe embarrassment to the Spanish Church which is already struggling with falling attendance in the traditionally Catholic country.
Two representatives of the Archbishop of Toledo, who is also the primate of Spain, told celebrants at Mr Martin's church that they must forgive him "because he was unwell".
They said the priest, who has gone into hiding, had promised to repay the money he had stolen from the church coffers. But locals said his behaviour had been deplorable.
"It's one thing to give in to the evil temptation of stealing," one female resident told local media. "But to then spend it on women!"
Another villager said the revelations had come as a surprise. "He acted as pious as could be in front of us. For a man of the cloth to behave that way is unbelievable. He should be ashamed of himself."
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