Djokovic bested Nadal 6-2, 7-6 (7-1) on the clay courts of the Monte Carlo Country Club, snapping Nadal's 46-match winning streak at the event.
Nadal boasted a 48-1 overall mark in Monte Carlo, with his only previous loss coming to Guillermo Coria in the third round of the 2003 tournament.
Djokovic himself had fallen twice to Nadal at Monte Carlo in previous years, including finals in 2009 and 2012.
The top-ranked Serbian superstar improved to just 3-12 lifetime against Nadal on clay surfaces.
The start of Sunday's title tilt was delayed 45 minutes by rain. Afterwards, Djokovic needed just 49 minutes to claim the first set, and then overcame Nadal's 4-2 lead in the second set before closing it out with dominating tiebreaker.
Djokovic collected his third title of 2013 after earlier victories at the Australian Open and in Dubai.