The outbreak in Palmanova affected 27 people, 26 of whom were foreign tourists.
One 70-year-old British tourist died in a Palma hospital after contracting the illness.
Health officials investigating the outbreak said positive samples had been taken from the outdoor hot tub at the hotel, which is currently closed.
Legionnaires' disease is a lung infection caused by Legionella bacteria, and can be particularly dangerous for people with pre-existing health conditions.
It isn't contagious and can't be spread directly from person to person, and is usually caught by breathing in small droplets of contaminated water.
The Daily Mail reports that, since being informed of the first case on 4 October, regional health authorities worked with local police and closed beach showers and a water fountain in Palmanova.
According to The Sun, the regional health authority said in a statement that they were informed of 27 cases of Legionnaires' disease from 4 October to 16 November, which affected 26 foreign tourists who had stayed in hotels in the resort, 20 of whom were from the UK.
It added: "They have all recovered apart from the gentleman aged 70 who suffered different illnesses including diabetes and chronic leukaemia and coronary heart disease.
"He died in hospital on October 11.
"The investigation to determine the source of infection has concluded that it is an exterior jacuzzi tub in one of the hotels in the Palmanova area."