Ranked fifth in the world, the Spaniard was set to meet Austrian Dominic Thiem in the final early this morning (Singapore time).
A win will grant Nadal his 30th Masters title, equalling the record held by his vanquished opponent, Djokovic.
Little by little Thiem worked his way back into the breaker, having and saving two set points in succession, but it was Nadal who would edge the first set tie-break.
Playing his first-ever Masters 1000 final, the Austrian never looked fazed by the occasion and despite being broken in the first game of the second set, continued to fight till the end.
Nadal edged a bruising first set after blowing eight break points with a top-class tiebreak, playing adventurous shots which sapped Goffin's energy and the world number 10 ceded the final point with a double fault. "I wasn't winning too many points on his service games until the last one where I managed to return many balls back in play and then win the match".
That the two men were among the four most prolific Major champions, both with career Grand Slams, and both with repeated stretches as world No1 only added to their status in tennis's record books: Djokovic had a tally of 223 weeks at the top, Nadal 141 weeks.
"I tried my best".
Nadal receives 1,000 Emirates ATP Rankings points and is expected to climb to No. 4 in the Emirates ATP Rankings, surpassing Federer. I really enjoy these tournaments.
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Of course the conversation inevitably moved to the fact that with this win, Nadal has leapfrogged Roger Federer in the rankings, not that he gave much store in the rankings to determine who would lift the title at the French Open. I am happy the way I played today, being able to make it to the final once again.
The pair stayed neck and neck until Thiem lost his nerve and made two unforced errors in a row, gifting Nadal the set.
Rafael Nadal masters Madrid.
The Madrid Open started the rivalry, with the Caja Magica witnessing an engrossing semi-final in 2009 lasting over four hours which Nadal won after saving three match points. "I was trying my best", Djokovic said.
Four-time champion Nadal rediscovered his ruthless streak and ended a three-year, seven-match losing streak against Djokovic to progress to the final two. "He has already reached a Masters 1000 final and is sure to play more", he said.
Novak Djokovic of Serbia wipes his face with a towel after being defeated by Rafael Nadal of Spain in their mens semifinal tennis match at the Madrid Open tennis tournament in Madrid, Spain, Saturday, May 13, 2017. In Monte-Carlo and Barcelona I did well, same here.
"This is a very emotional period of the season", Nadal told reporters.
"It's true that some matches are more important than others".