Federer and Nadal have played each other four times over recent weeks
World number one Rafael Nadal began 2011 with a straight-sets win over Roger Federer at an exhibition event in the United Arab Emirates.
The Spaniard, 24, battled to a 7-6 (7-4) 7-6 (7-3) win to retain his title at the invitational World Tennis Championships in Abu Dhabi.
Nadal trailed 3-0 in the first tie-break but was helped by several unforced errors from Federer.
Robin Soderling beat Tomas Berdych 6-4 7-6 (7-3) in the third place play-off.
It was the fourth time in five weeks that Nadal and Federer had met, following
the final of the ATP World Tour Finals
in November and back-to-back charity matches last month.
"I never lost my serve but I still lost the tournament, it's kind of tough," said Federer.
"Rafael and myself must have played so many times and so many times it has come down to a few shots here and there. He is an amazing shot-maker. Me as well but today he got the better of me."
Nadal said: "For both of us, these are the first matches of the season. So it is special for us. This is the perfect place to start the season here in Abu Dhabi."
Both men now head to Doha for the Qatar Open, their first tournament of the new ATP season, which gets under way on Monday.
Nadal leads world number two Federer by more than 3,000 points in the rankings and currently holds three of the four Grand Slam titles, with the Australian Open, which begins on 16 January, the only one missing.
"It doesn't make any difference if I have won three Grand Slams or if I won one or two," said Nadal. "It's in the past.
"When I start the season, everything starts. I don't think if I have to defend 100,000 points or if I have to defend 1,000 points. In Australia or in Doha when I start the season, I have zero points. So we start from there."