The Spaniard's victory over Stanislas Wawrinka at the Barclays ATP World Tour Finals means he can no longer be caught by Novak Djokovic, who he overtook last month.
It is an incredible achievement given Nadal did not play a tournament until February after seven months out with knee problems and lost in the first round at Wimbledon.
Many questioned whether he would be able to hit the same heights but he silenced the doubters, who included himself, by winning 10 of his first 13 tournaments.
Nadal had played down the importance of the number one position prior to his 7-6 (7/5) 7-6 (8/6) victory over Wawrinka, which also booked his spot in the semi-finals at London's O2 Arena.
But afterwards he was happy to admit what it means to him and how much he feels he deserves it.
Nadal said: "During all my season I said it's not my goal, but the real thing is after all the success I had during the season, I think that after all what happened last year, I felt I deserved to be there at the end of the season. And today I did it.
"It was one of the best things that I did in my career, to come back to the number one after three seasons. That's very difficult in our sport, and after a very important injury.
"That's an emotional thing for me. At the same time to be able to qualify for the semi-finals is an extra thing. And the good thing is after two matches now I can really be focused only on the tournament because the year-end (ranking) is over."
Nadal is unlikely to find his position under threat any time soon given Djokovic won the World Tour Finals last year and the Australian Open while his rival has no ranking points to defend until February.
Nadal said the position became important to him after he beat Djokovic to win his 13th grand slam title at the US Open.
He added: "I think it's a great effort because I have unbelievable competitors in front. That makes the year end number one very, very special.
"You can feel how tough everything is that winning all the things that I won this year, until the last tournament, I was not able to secure it. So that makes everybody realise how difficult it is to be there."
Wawrinka made Nadal fight all the way for his landmark victory, and it is exceptionally hard on the 28-year-old that he still remains without even a set against the Spaniard in 12 meetings.
Wawrinka qualified for this tournament for the first time after the best season of his career and he recovered from an early break in the opening set to force a tie-break.
At 5-5, he had Nadal on the ropes but the top seed somehow managed to scramble a lob over Wawrinka and draw the error.
Nadal then took the set point after Wawrinka stumbled coming to the net, the Swiss' frustration all too evident as he destroyed his racquet.
The pattern of the second set was the same, with Wawrinka hitting back after Nadal had taken a 4-1 lead.
But once more the big points went the way of Nadal, with Wawrinka placing a forehand wide at 5-4 when the set was in his sights.
Nadal did not put a foot wrong when saving a set point and successive errors from Wawrinka gave victory to the Spaniard even though he won three fewer points overall.
Wawrinka said: "I'm really disappointed. I had so many chances. But I think I played the right tennis.
"So far I didn't win any sets against him. But I still need to look on the positive side. I think today was my best match against him. I think I'm still improving."
Nadal was given a warning for slow play but Wawrinka was unhappy the Spaniard was not also penalised for coaching by his uncle Toni.
The Swiss said: "It's nothing personal against Rafa or against Toni. We all know, players and umpires, that Toni is always trying to help Rafa. That's normal. That's part of the game. But when it's too much, it's too much.
"Today I didn't agree with the umpire that he didn't tell him something or he didn't give him second warning just because it was Rafa. We all see. I was there. Before every point, he was trying to coach him."