The Swedish company is already the world's largest online music streaming service, with around 50 million subscribers and 1500 staff.
"We are recruiting another 500, up to 2000 people," Martin Lorenzon told reporters at a trade fair in Helsinki.
He did not specify when the new hires would join the company.
The Swedish-based pioneer of online music streaming announced its expansion amid mounting competition, notably from a newly launched advert-free music video service from YouTube, part of Google's online empire.
Sony Music has also indicated that it is looking at expanding paid subscriptions to its online music service.
"Everyone loves music, so if you have a product which everyone loves, of course there will be competitors…Competition is also good. Then I have to run faster," said Lorenzon.
Spotify hit world headlines two weeks ago when US pop star Taylor Swift pulled her music off the service calling it "an experiment that I don't feel fairly compensates the writers, producers, artists and creators" in an interview with Yahoo Music.
Last week it responded by stressing that it had paid $2 billion to artists and songwriters since its 2008 launch.