Moscow - Cristiano Ronaldo's Portugal will come up against Spain in the standout fixture of the 2018 World Cup group stage, while England were handed an encounter with a dangerous Belgium side in Friday's draw.
READ: Full 2018 World Cup draw
Spain, the 2010 World Cup winners, have been revitalised under Julen Lopetegui after underperforming in recent years and were seen as the team to avoid after missing out on a place among the top seeds.
It was Portugal, the reigning European champions, who were handed an Iberian derby in a glitzy ceremony held at the Moscow Kremlin and featuring an appearance from Russian President Vladimir Putin alongside FIFA president Gianni Infantino.
The draw also laid out all sides' potential routes to the final, and revealed such tantalising prospects as a quarter-final between Spain and Argentina, and possible semi-finals of Spain against Germany or France versus Brazil.
Spain's match against Portugal is a mouthwatering early clash, though, with the fixture set for the Black Sea resort of Sochi on Friday, June 15.
"They are the champions of Europe, they have fantastic players and we are talking about the highest level," coach Lopetegui told Spanish TV station Cuatro.
Real Madrid star Ronaldo will be 33 come next year's finals, meaning this will probably be his last shot at World Cup glory.
Meanwhile, reigning world champions Germany, the much-fancied Brazil of Neymar, and France will all be pleased with their draws, but the prospects appear tougher for Argentina.
They will come up against Croatia, Nigeria and tournament debutants Iceland as Lionel Messi looks to make up for losing the 2014 final to Germany.
The Barcelona man turns 31 during the tournament, meaning this is also probably his last chance to win the World Cup.
Germany were paired with Mexico, Sweden and South Korea in Group F as Joachim Loew's men try to become the first nation to retain the title since Brazil in 1962.
"I am certainly not scared," Loew told ZDF television.
Five-time winners Brazil, eager to exorcise the demons of 2014 and their 7-1 semi-final humiliation against Germany, drew Switzerland, Costa Rica and Serbia in Group E.
It has been said before that France coach Didier Deschamps has a lucky star over his head when it comes to these draws, and his side will be confident of emerging from Group C ahead of Australia, Peru and Denmark.
"Whatever the group, the French team have to qualify for the knockout round and have to finish first in the group," the 1998 World Cup-winning captain Deschamps told BeIN Sport.
Former England striker-turned television presenter Gary Lineker oversaw the draw and his nation will be pleased after Diego Maradona, who knocked Lineker's England out of the 1986 World Cup with his infamous 'Hand of God' goal, drew Gareth Southgate's men in Group G with Belgium, Tunisia and debutants Panama.
England manager Southgate was wary, however, after all his country's recent disappointments at major tournaments.
"We've been good at writing teams off and then getting beat. We've got to be prepared for every game," said Southgate, and England could in theory find themselves on a collision course with Germany and Spain later on if they do not win the group.
England begin against Tunisia in Volgograd -- in a stadium built on one of the main sites of the Battle of Stalingrad, one of the bloodiest episodes of the Second World War -- on Monday, June 18.
Japan will face a tough task to finish in the top two of Group H that features Robert Lewandowski's Poland, Sadio Mane's Senegal and Colombia.
The tournament that spans 11 cities and 12 stadiums kicks off when host nation Russia take on Saudi Arabia on June 14 in Moscow's Luzhniki Stadium, which will also host the final on July 15.
The ceremony was staged inside the State Kremlin Palace, where Communist Party Congresses were held during the Soviet era.
President Putin said Russia had a "strong affection" for football.
"Our country is looking forward to the championship and intends to hold it at the highest level," Putin said.
The build-up to the tournament has been somewhat overshadowed by the controversy that surrounded the awarding of the tournament to Russia, and by fears of terrorism and hooliganism, as well as of Putin's relations with the West.
The draw also came just as Russia is dealing with allegations of widespread doping in other sports, including when it hosted the 2014 Winter Olympics.
But Infantino denied that doping was a problem in football.
"If you would have a serious doping issue in football this would be known by now, whether in Russia or any other country of the world," he said at a press conference.