Having recovered from deuce in his opening service game, the world number seven raced into a 3-0 lead, dominating the rallies from the back of the court and showing some sublime touch at the net.
Nadal shook his head disconsolately when a double fault helped Davydenko break for the second time and the Russian ended the set as he had begun it - with an ace.
The crowd, while still willing Nadal on, could not fail to be impressed by Davydenko's bold attack.
The Russian continued to dominate in the early stages of the second set, and looked set for a routine win when he broke for a 3-2 lead.
Davydenko, though, faltered dramatically as the prospect of a shock victory loomed larger, and Nadal's unrivalled will to win came to the fore.
With the Russian's forehand fading, Nadal earned four chances to break back - and took a fifth when Davydenko went long, the world number two crouching to his knees to celebrate and pumping his fist repeatedly.
The momentum appeared to have shifted decisively when, with Davydenko toiling, the Spaniard took a 5-4 lead, but the doubts that have plagued his game in recent weeks returned.
He produced a final flourish when he broke back for a second time to force a tie-break, but he could find no further inspiration, Davydenko claiming it and sending the Spaniard out.
In the doubles, second seeds Bob and Mike Bryan got their campaign back on track with a 6-3 6-4 win over Lukas Dlouhy and Leander Paes.
The American pair lost their opening match against Max Mirnyi and Andy Ram, but were always in control against the Czech/Indian duo.
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