Nadal beat Hyeon Chung in the second round of the Paris Masters yesterday to seal the top spot.
He is 1,460 points clear of Federer in the world rankings with victory ensuring he has an unassailable lead before the ATP World Tour Finals in London.
PARIS MASTERS RESULTS: The latest scores from Paris event
The Spaniard has reached the final at the O2 twice but has never won the competition.
And in a Twitter video released yesterday, Nadal vowed not to relax after winning the year-end race.
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Nadal said on his official Twitter page: “Hello everybody guys. It’s an mportant day.
“Today I confirmed I’m going to be the no.1 at the end of the season so it’s an important achievement for me after all the things that have happened over the last couple of years.
“It means a lot to me. When I receive this trophy in London it’ll be a very special moment.
“Without all of you it wouldn’t be the same, of course. Thanks for all the support always.
“The season is not over. We’re going to try our very best in the last two events.”
Nadal finished 2008, 2010 and 2013 at the top of the rankings. He becomes the oldest player to finish a campaign at world No 1 since they were introduced in 1973.
He will play Uruguayan Pablo Cuevas in the last 16 today.