Beaten surprisingly early on Madrid's blue clay earlier this month, the 25-year-old Mallorcan has been back to his destructive best on the red dirt at the Foro Italica but saved his most impressive display to last.
Both players refused to budge an inch in a brutal 76-minute opener but Djokovic, who memorably beat Nadal in straight sets in last year's final, faded and the match ended in anti-climax when he double-faulted to gift Nadal a record sixth Rome title.
Six-times French Open champion Nadal's victory means he will rise back to second in the world rankings after being overtaken by Roger Federer last week -- a significant move ahead of Roland Garros where he will now definitely be in the opposite half of the draw to Djokovic.
The match, the 32nd between the pair, had been postponed by rain on Sunday, but both players came out firing in front of a healthy crowd as the sun finally returned.
Nadal went immediately on the attack, carving out two break points in Djokovic's opening service game only for the elastic-limbed Serb's defences to dig him out of trouble.
The Spaniard did draw first blood when he punished a dreadfully disguised Djokovic drop shot in the fifth game to move ahead but he immediately handed the service break back with a lacklustre game culminating in a rare forehand error.
Djokovic briefly switched up a gear and began to dominate the rallies, so much so that he seemed poised to take the set when Nadal served to stay in the set.
At 30-30 Djokovic peppered the corners with a series of meaty groundstrokes and had Nadal in trouble before a forehand was wrongly called out and immediately over-ruled by the umpire and the point was replayed.
A frustrated Djokovic lost the next two points with errors and he was broken at 5-5 as Nadal prevailed in a scintillating rally with both players in at the net.
Nadal served out with ease to claim the opening set and immediately moved 2-0 up in the second set.
Djokovic hung on grimly, threatening to break back in the fourth game only to mess up an easy smash.
Djokovic suffered with a couple of bad bounces as he served to stay in the match and the deflated 25-year-old double-faulted to end the contest and hand Nadal a 21st Masters Series title to move ahead of the record of 20 he shared with Federer.
"I think that the match today was quite close, even if he won in straight sets," Djokovic said. "If you don't use the opportunities against Rafa he gets momentum.
"But I go to Paris with confidence."
With the French Open and Wimbledon looming, Nadal has also regained his old supremacy over the man who took his No.1 ranking last year and who had beaten him seven times in a row before the sequence ended in Monte Carlo last month.