The Spaniard's hopes of winning the year-ending showpiece for the first were crushed by a clinical Djokovic, who brought the curtain down on the ATP World Tour Finals with an emphatic 6-3 6-4 win.
Nadal was always playing catch-up after losing the first three games and at times he was given the run-around by the man he replaced at the top of the world rankings in October.
While defeat no doubt dented his pride, Nadal thought there was very little to choose between he and Djokovic, who now leads their personal duel 22-17.
"The thing that made the difference in today's match was the serve, I didn't serve well, he served well," Nadal said. "For the rest I felt that when I was playing, I was not far away off his level.
"At the beginning he was playing much better than me. After that I didn't see the difference.
"I felt that I was playing enough well to be little bit closer than the score. But at the end, I lost 6-3 6-4. I lost 6-3 6-4 because the opponent played better than me."
Despite ending the year with a defeat, Nadal is deservedly ranked number one in the world after reaching 14 finals in his 17 tournaments this year, winning 10 of them, and putting together a 75-7 match record.
His return to the summit after a seven-month injury lay-off has been a superhuman effort.
"Winning or losing today was not going to change my career," Nadal said.
"I am not very disappointed. I know that I was not the favourite for the match, even if I tried with the right attitude, fighting for every moment, even if the match was not going the way that I would like.
"It's very special what happened this year."
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