Mr Chavez has not been seen in public since undergoing treatment for cancer.
El Pais has withdrawn the photo from its website and collected copies of the first edition of Thursday’s paper from newsstands, the BBC’s Tom Burridge reports from Madrid.
The paper said in a statement that it had obtained the image from a news agency but that it had not been able to independently verify the date, location or circumstances of the photo.
The photo had stayed on El Pais’s website for around half an hour, it said.
The paper has now opened an investigation into “the mistakes that may have been committed in the verification of the photograph”.
Mr Chavez’s illness has become a political issue in Venezuela, with the opposition criticising the president’s prolonged absence from the country.
Mr Chavez won re-election in October, but his 10 January inauguration ceremony has been indefinitely postponed because of his illness, in a move that forced the Supreme Court to decide on the legality of the situation.
Although the court said the president’s absence was legal and authorised by the National Assembly, opponents did not agree with the interpretation.
In recent days, Venezuelan officials have said that Mr Chavez’s treatment in Cuba is going well and that he is in good spirits. (BBC)