The current champion in Beijing was at his ruthless best to defeat Nadal 6-3, 6-4, a day before he is set to be unseated at the top of the world rankings by the number two Spaniard.
The result was Nadal’s first hardcourt loss of the season.
The second seed in Beijing only showed rare glimpses of the form that has seen him win 10 titles this year, with his Serbian opponent racing to a 3-0 lead in the first ten minutes.
Top seed Djokovic then powered ahead, showing formidable power-hitting to take the first set 25 minutes later.
The pair displayed incredible movement in the opening game of the second set, engaging in quickfire net-play, much to the delight of the crowd.
Nadal came out on top of that duel, winning the point, but Djokovic took the game to break serve.
Djokovic then kept his nerve, holding serve until the conclusion of the match on one hour 27 minutes.
The victory will be a sweet for Djokovic, who is spending his 101st week at number one, and will have his current streak of 48 weeks ended on Monday when the ATP announce its new rankings with Nadal at the top.
The Spaniard only needed to make the final to unseat him.
Djokovic has been in dominating form at the China Open, where he has an unbeaten run stretching back to 2009. He did not attend in 2011.
But Nadal has had the beating of Djokovic this season, coming out on top at the semi-finals at Roland Garros and last month’s final at the US Open, as well as the Canada Masters.
Heading into the match at Beijing’s National Tennis Centre, the pair had played each other 37 times, with Nadal leading the rivalry 22-15.
The winner of the China Open takes $557,100 prize money and 500 ATP Points.