Gibraltar's government said the ship entered territorial waters on Tuesday.
The incident comes a day after Prime Minister Theresa May tried to calm a row over Gibraltar and its place in the Brexit process.
With Brexit tensions rising over the British territory, Tuesday a Spanish gunship the Infanta Christina made an illegal incursion into Gibraltar's territorial waters.
The conservative leader told lawmakers in Congress that he's aiming to "give certainty" to Spanish residents in the U.K., British residents in Spain and companies investing in the U.K. His aim is for future relations between the European Union and U.K.to maintain "today's intensity" to everyone's benefit, he said.
"These actions effectively defend our sovereignty over British Gibraltar territorial waters".
David Davis, London's chief negotiator in Britain's divorce from the European Union, is meeting with Portugal's foreign minister, who has said he wants the United Kingdom and the 27 remaining EU members to stay close after so-called Brexit.
"The risk is that this makes Brexit negotiations more hard when it's in everyone's interests that they go as smoothly as possible", said Christian Hernandez, president of the Gibraltar Chamber of Commerce.
That, at least, is what politicians from both countries have been carefully asserting since Michael Howard, a former British Conservative party leader, made a not-so-subtle suggestion Sunday that force would be on the table in some recent unpleasantness over the long-disputed peninsula.
The gambling industry in Gibraltar is estimated to employ around 3,000 people, with another 1,000 indirectly depending on the sector for employment, many of them living on the Spanish side of the border.
One senior figure from the Gibraltar industry said there had been predictions of the sector's demise for a number of years, yet "each and every hurdle has been overcome".
More recently, Lauren Frayer reported for NPR that in 1969 Spanish dictator Francisco Franco closed the territory's border with Spain, effectively isolating it from all but sea and air travel.
Britain's Foreign Minister Boris Johnson, speaking to reporters this morning, repeated the UK's sovereignty commitment to Gibraltar.
The government's White Paper, published in the lead-up to the beginning of Brexit negotiations, said "As the United Kingdom leaves the European Union, the unique relationships that??? the Overseas Territories have with the European Union will also change".
Talk of the war followed the EU's declaration that Madrid would have a veto on the inclusion of Gibraltar in any post-Brexit trade deal.
A 2002 referendum saw its residents vote 99% against Spain sharing sovereignty with Britain, with an 88% turnout.