Spanish princess in Spain - fantastic! (7)
I believe the answer is:
infanta
'spanish princess' is the definition.
(title for a Spanish princess)
'in spain fantastic' is the wordplay.
'in' indicates a hidden word.
'INFANTA' can be found hidden inside 'spain fantastic'.
(Other definitions for infanta that I've seen before include "Spanish monarch's daughter" , "Daughter of a Spanish or Portuguese king" , "member of the Spanish royal family" , "Spanish princess" , "Formerly, the daughter of a Spanish king" .)