Djokovic remains in the driving seat to finish 2014 top of the standings, and returns to action this week looking to retain his Paris Masters title following the birth of his first child.
However, the Serb now sits just 500 points clear of Federer at the summit of the rankings, after the Swiss followed up his victory at the Shanghai Masters - where he beat Djokovic in the last four - by winning the Swiss Indoors Basel title on Sunday.
Another 2,500 points are still up for grabs in Paris and at next-month's season-ending ATP World Tour Finals in London next month, and Djokovic is in no doubt that Federer will fight him all the way for the right to end the year on top of the world.
"Of course Roger is playing some great tennis and he showed that before the US Open, [at] the US Open and then winning Shanghai, playing a great match against me in the semi-finals and then winning Basel so I'm sure he's going to be very motivated to fight for number one," the 27-year-old said on Monday.
"It's pretty much open, I do defend a lot of points here and in London, but over the years I've played well in Paris and London and I prepared myself well under the circumstances, I tried to get as many hours on the court as possible, and right now I will try to put all my focus and attention into this tournament.
"[I will] take one match at a time. For both of us, to finish the year as number one in the world - it's a big objective.
"He has the Davis Cup final, but I'm sure he'd like to be number one as well. We're both playing well and it's something that's going to play a big role in the upcoming weeks."
Federer, now 33, has enjoyed something of a renaissance this year after what was, by his own exalted standards, a disappointing 2013.
But Djokovic has not been surprised by the 17-time grand-slam champion's form.
"This year he came out strong again, competing for grand-slam titles, competing for number one in the world - and I never thought that he's not competition for world number one, never ruled him out," he added.
"I always thought that he's one of the best players in the world and keeps on proving everybody that he deserves to be there.
"I have lots of respect for what he does and I don't think the age is an issue for him, as a matter of fact, I think he's playing some of his best tennis this year."