Nadal plays his first match in over seven months on Tuesday, as he competes in Chile to start his preparations for an expected Major return at the French Open in May.
A 90-minute hitting session with local player Nicolas Massu was the former world number one's fourth straight day of training since arriving in the South American country.
Nadal is wearing a white bandage on his knee and first match is a doubles with Argentina's Juan Monaco. On Wednesday, he will play singles in the second round against the winner of Guido Pella and Federico Delbonis's all-Argentine clash.
"The knee is much better, but they've told us he will feel some discomfort and lack of mobility until the end of the month," said Toni Nadal, the seven-times French Open champion's coach and uncle. "But it's definitely getting better."
"The bandage is normal and is part of the treatment.
"His game is much better than when we got here," Toni Nadal said. "It was better yesterday and even better today. We're looking to the doubles as an added test."
Nadal is regarded as one of the best if not the best clay player of all time.
He has won 93% of his matches on the surface, and regularly wins tournaments without dropping a set.