Goffin, who is making his first appearance at the ATP World Tour finals, came through in three tough sets – 7-6, (7-5), 6-7, (4-7) 6-4.
The Belgian got the better of Nadal in an epic contest which lasted over two-and-a-half hours at London’s O2 Centre.
After the match, Nadal, who was formally confirmed as the world number one on Sunday, pulled out of the tournament.
The Spaniard had been struggling in the run-up to the competition with a knee injury and he withdrew from the Paris Masters.
And Goffin has lifted the lid on the special nature of his win.

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“Absolutely it was a tough fight until the end,” Goffin said after the match.
“Nadal is a big fighter and so tough mentally.
“It was tough to finish the match and so happy finally to find they key to win this match.
“To do it here at ATP World Tour finals is so special.
“I’m really happy and thank you for such a great atmosphere.”
Meanwhile, in the other round-robin match in the Pete Sampras Group on Monday, Grigor Dimitrov beat Dominc Thiem 6-3, 5-7, 7-5.