A missing person's alert with a photo of Gabriel went viral in Spain via mobile messaging services and social media.
"This morning, the Civil Guard stopped the companion of Gabriel's father while she was transporting the little boy's corpse in the boot of a car," Interior Minister Juan Ignacio Zoido said.
Spanish Prime Minister Mariano Rajoy tweeted: "I share with all Spaniards the pain of losing Gabriel. Rest in peace."
The tragic discovery comes after hundreds of Spanish police and volunteers searched for the missing boy on March 3. Around 1000 people were involved in the search, a Guardia Civil police spokesman told AFP.
Gabriel was reported missing on February 27 after he left his grandmother's home in the village to play at a friend's house nearby.
Police and volunteers scoured the countryside in the area on foot and on horseback, using helicopters and drones to try and locate him.
The moment Ana Julia Quezada is arrested by the Civil Guard. Photo / via El Pais
"(We) hope we will get Gabriel back soon and that he will return home with his family, which is where a boy who is only eight should be," his father Angel Cruz told reporters on March 3, before breaking down in tears.
Gabriel Cruz's stepmother, Ana Julia Quezada, was seen by her partner Angel Criz's side during events dedicated to finding the missing child.
Angel Cruz and Ana Julia Quezada. Photo / Supplied
Gabriel's parents also addressed an 8000-strong crowd at a rally, which was organised with the hashtag #TodosSomosGabriel (#WeAreAllGabriel) to support the search for the missing child.
Last week a man was detained for stalking Gabriel's mother Patricia Ramirez, though authorities stressed he was not held in connection with the disappearance.
The man, named as Diego Miguel, had become "obsessed" with Patricia Ramirez and in 2016 was ordered by a judge to stay away from her and given a three-month suspended jail sentence, according to court documents seen by AFP.
