World number one Djokovic progressed through to Saturday’s final after overcoming Tomas Berdych in a bruising encounter, 6-3, 7-6 (7/3).
Earlier Nadal also won in two sets but in a more straightforward fashion, beating Ukraine’s Illya Marchenko 6-3, 6-4 in little over an hour.
“I guess it’s a pretty important match tomorrow, let’s see what happens,” said Djokovic.
“It’s a final so you fight for the trophy.” he added.
“And knowing that across the net you have the player that you played against the most ever in your career adds more importance to that final.”
Saturday’s final will reignite one of the greatest rivalries of modern tennis.
Of the 23 finals they have contested so far, Djokovic has a slight advantage winning 13. They have faced each other in the final of all four Grand Slams.
Saturday’s final will also be the 99th of Nadal’s career and Djokovic’s 16th consecutive ATP final.
Head-to-head in all matches, the pair have each won 23.
Djokovic was made to work for his victory by third-seeded Berdych and a lesser player may have succumbed to the Czech.
The Serb, who had beaten Berdych in 21 of their previous 23 encounters, lost his very first serve and then faced another break point to go 1-4 down.
However, he held his serve and then won the next four games in typical fashion to take the first set.
Any notion that Berdych might then roll over in the second set soon faded as the pair held serve throughout, treating fans to high-quality tennis throughout.
Djokovic though was relentless in the tie-break, breaking Berdych’s first serve and ended up winning the decider 7/3.
It means Djokovic is still to drop a set all week in four matches.
Afterwards he admitted he had a slight concern over an arm injury which has required attention from a physio but added that he didn’t think “it’s a major concern”.
Nadal, meanwhile, who endured a miserable 2015, showed he could be returning to his best with his most impressive performance of the week, winning 6-3, 6-4 against Marchenko.
“To be back in a final is always a great feeling, especially the first week of the season,” said the Spaniard.
He added: “For sure is important for me for my confidence, confirm that the end of 2015 season had been something realistic and this beginning of 2016 I am still playing well, so I’m able to already won four matches here and be in the final.”
Nadal’s serve dominated throughout against a player who had knocked out the reigning champion and number four seed David Ferrer in round one.
Nadal won 100 per cent of all his first service points in the first set, 89 per cent overall and gave up only one break point, which he held.
He also fired down six aces and hit 16 winners.
Marchenko, the world number 94, was by no means disgraced in his first ever match against Nadal.
Prior to this tournament, he had never taken a set off a top 10 player but as well as beating Ferrer, the amiable Ukrainian also saw off France’s Jeremy Chardy and Russia’s Teymuraz Gabashvili, both well above him in the rankings.
He may be consoled by one of the biggest pay days of his career, $57,380 (52,715 euros).