Zapatero, a socialist, told the leaders gathered in the Chilean capital, Santiago: "I want to express to you President Hugo Chavez that in a forum where there are democratic governments ... one of the essential principles is respect.
"You can disagree radically, without being disrespectful," Zapatero, a socialist, said sternly, drawing applause from some of the other heads of state.
Chavez, a former soldier, made his mark on the three-day summit from the start, announcing his arrival earlier in the week with defiant lyrics from a Mexican ballad.
"With the truth in hand, I do not offend, I do not fear," Chavez said on Saturday.
"The government of Venezuela reserves the right to respond to any aggression."
Energy and paper
The 19 leaders at the Chilean summit were nearly all leftists and the gathering was mostly friendly, although tension flared between neighbours Argentina and Uruguay over a controversial pulp mill along a border river.
Uruguay granted a long-awaited start-up permit to a Finnish group for the pulp mill on Thursday, drawing swift criticism from Argentina and deepening a long-running dispute.
The official theme of the summit was social cohesion, but many of the region's top leaders took advantage of the event to hold bilateral meetings on energy.
Latin American economies have expanded rapidly in recent years, putting pressure on energy supplies due to rising consumer demand and factory output in countries such as Chile and Argentina.
While most heads of state were due to leave Chile on Saturday, Chavez joined some of South America's most left-leaning leaders at a rally of about 3,000 people gathered for a "People's Summit" in a Santiago stadium.
Chavez interrupted his speech at the rally to call Cuba's Fidel Castro, who he considers his mentor. Chavez paraphrased a message from Castro congratulating Chileans who fought against former dictator Augusto Pinochet.
"Well Fidel, what a shame that we don't have speakerphone on this mobile, the people wanted to hear you," said Chavez, dressed in a red T-shirt.
Joining Chavez at the rally were Bolivia's President Evo Morales, Cuban Vice President Carlos Lage and Nicaragua's Daniel Ortega.
In his closing remarks from the leaders summit, Morales accused other countries of perceiving him as a lackey of the Venezuelan president.
"They treat us like animals because of the unconditional cooperation from comrade Hugo Chavez ... him as the big one and me as the little one," he said.