Defending champion Djokovic beat Nadal in the 2013 showpiece, and stormed into the quarter-finals of this year's tournament by destroying Spain's Pablo Carreno-Busta 6-0 6-1 in just 47 minutes.
Djokovic was utterly dominant throughout the contest and was only prevented from condemning his opponent to the dreaded 'double-bagel' in the fourth game of the second set as Carreno-Busta finally got on the board.
The Serbian will now face another Spaniard after Guillermo Garcia-Lopez stunned fifth seed Tomas Berdych 4-6 6-3 6-1.
Berdych appeared to be on the way to a routine victory, but the Czech capitulated in the deciding set after Garcia-Lopez had showed excellent resolve to fight back and level matters.
Meanwhile, Nadal became only the 11th player in the Open era to record 300 tour-level wins on clay by defeating Andreas Seppi 6-1 6-3.
The world number one was never threatened by his Italian opponent at any stage during the match, winning 82 per cent of points on his first serve in another masterful display on his favourite surface.
That victory sets up a tantalising match with compatriot David Ferrer after the sixth seed cruised to a straightforward 6-4 6-2 success against Grigor Dimitrov of Bulgaria.
Roger Federer was another comfortable winner at the ATP 1000 event in Monaco, progressing with a 6-4 6-1 triumph over Lukas Rosol.
Federer dispatched Rosol in just under an hour, recovering to qualify for the last eight after initially dropping serve in the third game of the opening set.
Frenchman Jo-Wilfried Tsonga will be Federer's opponent in the next stage, the ninth seed coming back from a set down to beat Italy's Fabio Fognini 5-7 6-3 6-0.
Elsewhere in the draw, Stanislas Wawrinka was a walkover winner against Nicolas Almagro, who withdrew with a foot injury, and will take on Canada's Milos Raonic - a 6-4 6-3 victor against Tommy Robredo - in the quarter-finals.