The Gresini Racing rider, who celebrated his 30th birthday on Thursday, started fifth on the grid but quickly moved up to overtake his elder sibling before stretching clear for victory.
Marc's quest for a milestone 100th Grand Prix win across all classes came to an abrupt end on lap two when he lost control at turn 11, crashing out while chasing down his younger brother and stunning the home crowd.
"Not many words to describe this moment, we struggled a lot at the beginning of the year," Alex said.
"Today, for me, it was clear - go from the first lap, pushing, trying to take the lead. From that moment, I knew that the rhythm was really good until the end."
Championship leader Marco Bezzecchi finished second for Aprilia after failing to reel in the flying Alex over 25 laps, while VR46 Racing's Fabio di Giannantonio completed the podium to move up to third in the championship standings.
Marc's crash now leaves the reigning champion 44 points behind Bezzecchi in the championship hunt, as a first Jerez victory since 2019 remains elusive.
Marc had clinched his first pole of the season before winning a chaotic sprint despite a crash in rainy conditions on Saturday, but bright sunshine welcomed the riders at the Circuito de Jerez on Sunday.
Alex, who had been unbeatable in dry conditions at Jerez with a 2025 setup on his Ducati, made a perfect getaway from fifth on the grid.
After Marc got the jump from pole and Bezzecchi slotted in behind from the second row, Alex quickly pushed the Italian down to third before taking the lead from his brother with a dive on the inside.
As the elder Marquez brother chased him, his race unravelled spectacularly on lap two when he lost the front end and crashed at turn 11, much to the dismay of the Spanish crowd.
That moved Bezzecchi up to second, but the Italian had his work cut out trying to close the gap as Alex continued to stretch his advantage to more than a second.
Behind the leading duo, Di Giannantonio split the two Aprilias by pushing Jorge Martin down to fourth.
Both Ducatis fail to finish
Ducati had celebrated a one-two in Saturday's sprint, but Sunday's race came to a premature end for the Italian outfit when Francesco Bagnaia retired with a technical problem.
The factory Ducati team have now gone nine races without a Grand Prix podium - their longest drought since 2014.
But up front, it was all about Alex as he urged the crowd to increase their volume on the final lap - just as he did last year - before crossing the finish line and heading straight to the fans to soak up their adulation.
"We struggled a bit all weekend, so it wasn't easy, and we made a good performance. I'm very happy," said Bezzecchi, who now leads teammate Martin by 11 points.
"Alex for me was too fast today, but congrats to him. You deserve this, and I gave my all."