The Codex Calixtinus, one of the Western world's first 'guidebooks', is only shown to the public on special occasions such as Pope Benedict XVI's visit last November to the northeastern Spanish city.
Cathedral staff reported it missing on Wednesday afternoon, said a police spokeswoman.
"We are investigating its disappearance," the spokeswoman said.
"It is usually kept in a room to which only half a dozen people have access," she said, and special security measures are taken whenever it is unveiled to the public.
The authorities found no signs of a break-in in what local daily newspaper El Correo Gallego has dubbed "the theft of the century".
"It is not uncommon for international experts to dedicate themselves to this type of thefts. I believe the police will be able to find this document," said Culture Minister Angeles Gonzalez-Sinde.
The 225-page manuscript is a collection of texts including sermons, homilies to Saint James and practical travel advice to pilgrims.
It was created during the period of Pope Callixtus II, who encouraged pilgrimages and decided in 1122 that every year that Saint James' Day of July 25 falls on a Sunday should be considered a holy year.
The manuscript was stored "in theory inside a safe or a locked closet", the representative of Spain's central government in the northwestern region of Galicia, Miguel Cortizo, told reporters.
"Santiago has to recover it because it is the jewel of the cathedral and of the city," said the councillor for culture in Santiago's city hall, Angel Curras, adding the guide has "incalculable value".
A hermit claimed to have discovered the remains of Saint James, later to be known as the Slayer of the Moors, in 813.
They became a symbol to rally Christian Spain, then pinned down by the Muslim Moors to the northern strip of the peninsula.
The remains are held in a tomb within the cathedral, the destination for hundreds of thousands of pilgrims each year.