Olazabal fired a 4-under 66 in his final round to end the tournament at 10-under-par 270, five shots better than three other players. It was Olazabal's first victory on any tour since he won the Hong Kong Open in December 2002.
And the victory came at a special course for Olazabal, the Pula Golf Club, for which he is currently in the midst of a redesign.
'It took quite a long time, but I did it again,' said Olazabal, who ranks eighth all-time on the European Tour with 23 victories. 'I'm very happy because it [came] here in Mallorca on a golf course that I've been involved with.'
Garcia also finished with a 4-under 66 on Sunday to share second place with countryman Jose Manuel Lara (68) and England's Paul Broadhurst (70) at 5-under-par 275.
Miles Tunnicliff and Simon Wakefield of England shot matching 69's to finish tied for fifth place at minus-4 with Welshman Bradley Dredge (70). Jimenez shot a 67 in his final round and shared eighth place one stroke further back with Sweden's Mattias Eliasson (71) and Frenchman Jean van de Velde (70).
Olazabal held a one-shot lead over Broadhurst and Swede Soren Hansen entering the final round, but by the time he stepped on the 10th tee, he was well clear of the field.
In fact, when Garcia finished off his 66 he was Olazabal's closest competitor.
Six strokes back.
'[I was thinking] to play solid,' said Olazabal, describing his mindset in the midst of such a big lead. 'There were no gimmees on that back nine. You have to play very solid golf to get a decent score. I knew things were in my hands and I had to really play solid golf.'
If not solid, Olazabal was certainly steady throughout his four rounds. He collected 17 birdies to go along with seven bogeys, including just one in his final round.
His most important stretch during the final round was Nos. 4 through 9, during which he made four birdies to get to 10 under par around the turn. He added another birdie at 11 and dropped a stroke at 13, but by the time that happened, the title was all but his.
A perfect drive at the par-4 16th allowed Olazabal to enjoy the final three holes in relative comfort.
'Once I hit the tee shot on the fairway on 16, I thought very strange things would have to happen for me not to win,' said Olazabal, who now owns 30 overall career victories.
'The last couple of holes, it was very special.'