Spain's Interior Ministry declared a national emergency, deploying 30,000 police nationwide to keep order as governments from the two countries convened emergency cabinet meetings. Outages on such a scale are extremely rare in Europe.
The cause was unclear, with Portugal suggesting the issue originated in Spain and Spain pointing the finger at a break-up in its connection to France.
Portuguese Prime Minister Luis Montenegro said there was "no indication" a cyberattack had caused the blackout, which began on Monday morning.
Nonetheless, rumours circulated of possible sabotage, and Spanish Prime Minister Pedro Sanchez said he had spoken to NATO Secretary General Mark Rutter.
Sanchez said the nation had suffered a loss of 15GW of electricity generation in five seconds, equivalent to 60 per cent of national demand. He said that technicians were working to figure out why that sudden drop occurred.
"This is something that has never happened before," he said.
Joao Conceicao, a Portuguese grid operator REN board member, told reporters the company had not ruled out the possibility of a "very large oscillation in electrical voltage, first in the Spanish system, which then spread to the Portuguese system".
"There could be a thousand and one causes, it's premature to assess the cause," he said, adding that REN was in contact with Spain.
Spain's grid operator REE blamed a connection failure with France for triggering a knock-on effect.
"The extent of the loss of power was beyond what European systems are designed to handle and caused a disconnection of the Spanish and French grids, which in turn led to the collapse of the Spanish electric system," Eduardo Prieto said.
Earlier, parts of France suffered a brief outage. The French grid operator RTE said it had moved to supplement power to some parts of northern Spain after the outage hit.
In Spain, the power started returning to the Basque country and Barcelona areas in the early afternoon and to parts of the capital, Madrid, on Monday night.
According to the national grid operator, about 61 per cent of electricity had been restored by late Monday.
With AAP.
