The cars will be assembled under a joint venture majority owned by the Spanish group at a factory that Japanese carmaker Nissan shut down in December 2021 and that once employed nearly 3,000 people.
The joint venture will start recruiting 150 employees "in the coming months", the two companies said in a statement.
The agreement, the product of lengthy negotiations between Spanish authorities and the Chinese firm, was first announced on Tuesday but no details were given.
It was officially signed at a ceremony held at the plant attended by Spanish Prime Minister Pedro Sanchez and Chery executive vice president Guibing Zhang.
This project "will result in the creation of wealth and, above all, in the creation and maintenance of jobs," Sanchez said, adding it is "a symbol of the process of reindustrialisation" under way "throughout Spain".
Chery and Ebro said they plan to produce 50,000 vehicles per year at the plant in 2027, rising to around 150,000 per year by 2029.
Chery is the second Chinese carmaker to set up in Europe after China's top electric carmaker BYD said in December it would build a factory in Hungary as it pushes ahead with plans to expand into Europe despite growing competition concerns.
Founded in 1997, Chery is a state-owned company which says it sold 1.9 million cars in 2023. It rose to popularity in China about 15 years ago with its small petrol-fuelled city cars aimed at the local market.
It has since moved into the electric vehicle (EV) market although it is not one of China's best-known players, even if it claims to be its biggest vehicle exporter.
Chery's move comes as tensions soar between Beijing and Brussels, as the EU steps up actions to defend European industry against growing threats from China and the United States.
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