Cancelo provided the assist for Ricardo Horta to net an 82nd minute equaliser after Alvaro Morata had fired Spain in front midway through the first half.
Morata coolly converted from six-yards to finish off a slick counter-attacking move for the home side and it looked like it would get La Roja off to a winning start in their bid to reach next summer’s Finals until Horta struck eight minutes from time.
Cancelo was the architect, exchanging passes with Goncalo Guedes down the right flank and delivering a teasing low cross for the winger to score his first international goal.
The draw leaves Spain and Portugal two points behind leaders Czech Republic after the opening games in Group A2.
Portugal face Switzerland in Lisbon on Sunday, when Spain travel to Prague for a clash with the side sitting top of the group.
Elsewhere, Shea Charles made his senior international debut as Northern Ireland were beaten 1-0 by Greece.
The midfielder - who was an integral part of our Elite Development Squad's Premier League 2 success this season - came on in the 79th minute at Windsor Park for Ian Baraclough's men.
Defeat leaves Northern Ireland third in Group C2, with a trip to Cyprus up next on Sunday 5 June.