The 11-time grand slam winner beat wild card Pablo Andujar 6-0 6-4 in an all-Spanish semi-final to maintain his stunning form since returning from a lengthy injury lay-off.
Nadal will now face Stanislas Wawrinka in tomorrow's final and, as the undisputed clay-court king, the Spaniard is the favourite to win his third Madrid title.
However, the world number five insists his current run of form does not necessarily mean he will add to his seven Roland Garros trophies.
"I've only played seven tournaments, I don't know if I'm going to be able to compete to win Roland Garros," said Nadal on www.atptour.com.
"I don't know it today. The only thinking I have is that how I have played until now has been really good. The results have been really positive."
Nadal ran away with the opening set against Andujar, winning 88 per cent of his first serves and dropping just nine points in a one-sided contest.
World number 113 Andujar finally settled in the second set, improving his service game and carving out three break point opportunities but without being able to capitalise.
That proved costly and Nadal gained the crucial break in game eight when Andujar hit a weak forehand into the net.
That left the fifth seed serving for the match and he wrapped things up after one hour and 17 minutes with an unreturnable crosscourt forehand.
Wawrinka staged a third-set comeback to upset sixth-seed Tomas Berdych 6-3 4-6 6-4 in almost two hours on court.
Berdych paid the price for a slow start when he was broken in the opening game and then gifted two more break points to his Swiss opponent in game eight.
The Czech saved the first with an ace but then undid his hard work by double-faulting to hand the 15th seed the first set.
A single break in game nine of the second set was all it needed for Berdych to pull level at one-set all, and he looked to be on course for the final when he went a break up in the fifth game of the decider.
However, a forehand into the net from the sixth seed allowed Wawrinka to break back in game eight and another error on Berdych's next service game handed the Swiss the match.
Wawrinka is aiming to lift his second successive title having won in Oeiras last week, but knows he faces a tough opponent in Nadal and the home support he will receive.
"It's amazing for me to reach the final after taking the title in Portugal," he said on Sky Sports 4.
"But this is the biggest challenge I can have. I will try everything and if I play really well I have a little chance. It's an amazing challenge to play Rafa in Spain in a final on clay."