One may use both. "Spanish teacher" is the informal usage. "Teacher of Spanish is more of a title.

1. Teacher of Spanish. = He or she teaches Spanish. 2. Mr. Smith is a SPANISH teacher. (He teaches Spanish.) [Stress -- say strongly -- the word "Spanish.'] 3. Mr. Smith is a Spanish TEACHER. (He is a Spanish person. Maybe he teaches science.) [Stress "teacher."]