Federer gave his rival little chance to mount a challenge in the 22nd meeting between two of the greatest players of all time, winning his fifth season-ending title 6-3, 3-6, 6-1 at the ATP World Tour Finals on Sunday.
Federer won an incredible 92 percent of the points played on his first serve in the final, and lost only 13 points on serve in the entire match.
"I was able to stay offensive. Rallies were never that long," said Federer, who has won the season-ending tournament in Houston, Shanghai and London. "That kind of maybe frustrated him."
Nadal, the top-ranked Spaniard who won the French Open, Wimbledon and the U.S. Open this year, was able to break Federer once in the second set, but he appeared to tire as the match wore on. On Saturday, Nadal spent more then three hours and three sets beating Andy Murray to reach the final of the tournament for the first time in his career.
"I know I didn't spoil his vacation after this because he's had an amazing year," Federer said. "A year that any player dreams of."
The win cut Nadal's career record to 14-8 against the second-ranked Swiss player. In Grand Slam finals, Nadal is 5-2 against Federer, but Federer has now beaten Nadal all three times they have faced each other in the final tournament of the season.
In the first set Sunday at the O2 Arena, Federer lost only three points on his serve, and broke Nadal once. He then lost five points on serve in both the second and third sets, but four of them came in one game, giving Nadal his only break of the match.
"I don't want to say I gave it to him, but obviously Rafa is good enough off second serves he's going to win at least 50 percent off them usually, unless you're on a roll and he doesn't kind of figure out your second serve," Federer said. "But at that point, he was into the match. He knew the importance of it. He was able to find a way to break me in that game."
The decisive shift came early in the third set on Nadal's serve with the Spaniard trailing 2-1. He took a 40-15 lead when Federer sent a return long, but Federer then reeled off the next four points -- the last when Nadal sent a forehand wide -- to earn the break and essentially end Nadal's chances of winning.
On match point, Federer hit a forehand winner on the line, but the crowd apparently thought the ball was out as they sat quietly in the arena. Then Nadal started coming to the net to shake hands with Federer, who raised his arms in victory to set off a standing ovation.
Federer has won a record 16 Grand Slam titles, the last coming at this year's Australian Open, and he and Nadal have combined to win 21 of the past 23 majors.
"Everybody saw the match of yesterday, so everybody's free to think his own opinion," Nadal said. "I'm not going to say I lost the match because I was tired. What I'm going to say and what I feel is I lost the match because I played against a very good Roger Federer in one of his favorite surfaces. And when he's playing like this, it's very difficult to stop him, no?"
After ending his semifinal streak at major championships at Roland Garros and then faltering at the last two Grand Slam tournaments, Federer has played some of his best tennis of the year this week in London.
He won all three of his round-robin matches in straight sets, and then swept Novak Djokovic on Saturday to reach the final.
"You played unbelievable all during the week," Nadal said to Federer on court after the match. "So well done for everything."