Under the text of the draft law, which will be put to a vote in the region's parliament, patients will have their "will and dignity" respected during the final stages of their lives, the socialist government of Andalucia said in a statement.
Patients will be able to "refuse or stop any treatment or medical intervention even if this could put their lives at risk" and will have the right to "receive treatment against pain, including palliative sedatives", it added.
Daily newspaper El Pais reported that, under the draft law, doctors who "apply useless and unjustified measures to prolong life" could face fines of between 60,000 euros to one million euros (87,000 and 1.4 million dollars).
The regional government of Andalucia has already taken pioneering steps in Spain when it comes to euthanasia.
In March 2007 it agreed with a 51-year-old woman's request to have a respirator which was keeping her alive turned off.
Inmaculada Echevarria had suffered from muscular dystrophy since childhood and been confined to a hospital bed for years.
Her case triggered debate in Spain on the rights of people with incurable diseases to seek help in dying.
Spain's regions have extensive powers in areas such as health and education.