Nishikori, the 10th seed and one of the game's rising talents, made a blistering start on Nadal's favoured clay to win the first set 6-2 and was a break up in the second and serving at 4-3 when disaster struck.
After a long rally with the score at 15-30, the Japanese pulled up clutching his back and Nadal went on to win the game and the set 6-4 to force a decider.
In a tremendously disappointing finish to an entertaining encounter, Nishikori could barely walk to the net to capitulate after Nadal had raced into a 3-0 lead in the third.
"First of all I am very disappointed about what happened today in this final," Nishikori told spectators packed into the Magic Box arena.
"Unfortunately, I was hurting already and I tried to fight but Rafa was too good today so congratulations to him," added the 24-year-old, contesting his first Masters 1000 final and fresh from his debut title on clay in Barcelona last month.
"It's been a great few weeks for me in Spain," he said. "I won in Barcelona and now here the final in Madrid so it's becoming like a second home to me."
The premature end to Sunday's showpiece left the jury out on Nadal's form ahead of his bid for a record-extending ninth French Open singles title when the clay grand slam starts at the end of the month.
His latest triumph, his fourth Madrid crown, was the 27-year-old Majorcan's 63rd career title and 44th on clay, two short of Guillermo Vilas's all-time record of 46.
However, he has struggled on the red dust this season, losing in the quarter-finals in Monte Carlo and Barcelona and there is a sense that his days as the king of Roland Garros may be numbered.
Certainly the way Nishikori dictated play in the early stages will have set alarm bells ringing but Nadal still has this week's Rome Masters to fine-tune his game before heading to Paris.
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