The Italians succumbed to two goals in each half to slip to a 4-0 defeat, the worst scoreline in a final in European Championships history.
"They totally dominated this evening," Prandelli conceded.
However, the 54-year-old manager added: "You can grow from the experience. I am very proud of my team."
Italy competed bravely in over 90 minutes but were undone by strikes from David Silva and Jordi Alba and, late on, Fernando Torres and Juan Mata.
Substitute Thiago Motta also suffered a hamstring strain and Italy, who had already introduced their three replacements, were left to battle with 10 men for the last half hour.
One-time Roma and Fiorentina boss Prandelli admitted: "Perhaps we could have got back into the game at the start of the second half, we had two chances but of course once Thiago Motta went off injured, we didn't have anything left in the tank."
And he was pragmatic at full-time: "You have to hold your hands up and say the opponents were better, accept defeat.
"We have to congratulate a great side for their victory."
Prandelli, who will lead Italy into their 2014 World Cup qualifying campaign from the autumn, bemoaned the day's difference, but admitted his side were second best.
"Against a team like Spain I think you really need to be good in the tackle and fit," he said.
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