The grainy photo that El País originally splashed on its front page, billed as a global exclusive, portrayed the head of a man lying down with a breathing tube in his mouth.
The Venezuelan president has cancer and has been undergoing medical treatment in Cuba, where he had surgery in December. He has not been seen publicly for six weeks.
El País, one of the biggest Spanish-language publications in the world and an institution both in Spain and in Latin America, said in a brief online statement that it had withdrawn the photo after ascertaining that the image was not of Chávez.
Venezuelan political opposition leaders have criticised government secrecy over Chávez's condition while his supporters have accused foreign media of being in league with the opposition to spread rumours that the president's medical condition is worse than it is.
"El País apologises to its readers for the damage caused. The newspaper has opened an investigation to determine the circumstances of what happened and the errors that were committed in the verification of the photo," the newspaper said in the statement.
The photograph was on the paper's website for half an hour and also appeared in early editions of the print version of the paper before the company stopped the presses and changed the front page,