Federer's withdrawal on Sunday left Nadal needing only a win to seal his place at the top of the year-end rankings.
Rafael Nadal ensured he will end the 2017 season ranked as the world No1 after a 7-5, 6-3 victory over Chung Hyeon at the Paris Masters.
Nadal faced no break points in the second set but squandered four chances to edge 3-1 in front as Chung continued to put in a creditable performance against a man he had faced just once before, losing a quarter-final in Barcelona earlier this year.
Nadal's fourth finish atop the ATP rankings makes him the seventh man to accomplish the feat. He won at both the French Open and the US Open.
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It has been a stunning year for the 31-year-old, who won the French Open for the tenth time, as well as winning the US Open and reaching the final of the Australian Open.
"It's something that means a lot to me, but the season is not over".
Earlier yesterday, Germany's Alexander Zverev was knocked out in the second round when he slumped to a 3-6, 6-2, 6-2 loss to Dutch journeyman Robin Haase.
Chung's inexperience showed at the vital moment, as he threw away his serve to hand Nadal the first set after an hour of play.
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The 20-year-old German lost his composure after easing through the first set, as his bid for a third Masters title of the season was abruptly ended.
Chung sent out an early warning of his intent with a ripping forehand victor to break Nadal in the third game.
The 30-year-old Dutchman grabbed the crucial break with a stroke of luck from a net cord, before completing one of the biggest victories of his career with a run of four games on the spin.
After a wrist injury a year ago cost Rafael Nadal his streak of 11 consecutive top-five seasons, the King of Clay came back stronger than just about anyone could have anticipated, a journey that he cemented on Wednesday by clinching his finish at World No. 1.
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But the 31-year-old Spaniard - who is also trying to balance the delicate political situation in his native country with his status as an global sportsman - refused to hype up his potential coronation.