Edwards earned the title opportunity after winning the PFL’s 2025 middleweight tournament, and was looking to become champion after two defeats by Johnny Eblen for the Bellator middleweight title.
Edwards was also looking to join brother Leon, a former UFC welterweight champion, as a title holder, but was made to pay for a number of errors.
The event was watched by a number of sports stars at cageside, including Real Madrid’s Jude Bellingham, Thibaut Courtois and Trent Alexander-Arnold, who was left out of Thomas Tuchel’s latest England squad earlier on Friday.
After walkouts in which a confident Edwards was jeered by the Spanish fans and a determined-looking Van Steenis was roared to the cage, the contest started with the pair trading leg kicks.
In a close first round, Edwards made his first mistake as Van Steenis reversed the action on the ground to end in top position, despite blood pouring from his left eye.
In tactics rarely used by Edwards, the Briton looked to attack with takedowns but Van Steenis got the better of the early exchanges by flipping the momentum to control where the fight went.
When Edwards opted to strike, he looked faster and more dangerous than Van Steenis, but another mistake in the third round would prove to be his downfall.
Edwards again continued to wrestle and, while trying to take Van Steenis down against the cage, the champion delivered a flurry of elbows which forced the Briton to collapse on his knees.
Seeing Edwards was in trouble, the referee stepped in to end the contest, before Van Steenis put both arms out in celebration and closed his eyes as he soaked in applause from the home fans.
It was made sweeter for the Dutch-Spaniard by winning in front of his home fans in the largest MMA event to take place in Spain.
With the UFC yet to host an event in the Spain, the PFL took advantage when Van Steenis became champion in July by building a card around him.
Van Steenis, who grew up around Benidorm before moving back to the Netherlands, said pre-fight it was a “dream come true” to compete in front of his own fans.
While it was heartbreak for the Edwards brothers, the Van Steenis siblings – which included Costello’s younger brother Gino securing his own knockout on the undercard – celebrated a fairytale night.
“It went exactly as I wanted it to,” said Van Steenis.
“I didn’t do that alone; thank you to the crowd. This is the best country in the world. We are the best country in the world.”
Edwards now faces a rebuilding job but has shown his powers of recovery previously in his career.
The PFL does not boast a particularly deep list of contenders in the middleweight division and a few wins would likely put Edwards back in title contention.