Nadal went into the contest on the clay of Vina del Mar as an overwhelming favourite and edged a close first set but failed to press home that advantage.
Zeballos looked confident despite being the underdog and took advantage when Nadal visibly tired to draw level in the second set after winning a tie-breaker that went the distance.
The Spaniard fought hard in the third set and recovered after an early break to level at four games apiece but a seven-month absence eventually caught up with him as the match entered its third hour.
After holding to love, Zeballos applied pressure to Nadal's serve and got his reward with a break and in turn the Chile Open title.
The former world number one is due back on court today in the doubles final at Vina del Mar, where he is scheduled to partner Juan Monaco against Paolo Lorenzi and Potito Starace.