The world number five was taken to five sets by compatriot Fernando Verdasco but eventually fell after a gruelling four hour 41 minute battle on the Rod Laver Arena in Melbourne.
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The first set went the way of serve, although there were early signs that the world number five could struggle in the contest when he was forced to battle back from 0-40 in the ninth game. A tie-break was eventually required to separate the pair and, with the scores levelled at 6-6, Nadal double-faulted to gift Verdasco the opening set with the next point.
The Spaniards exchanged breaks in a particularly slow second set but it was Nadal who claimed the crucial break in the ninth game to take the set 6-4 and restore parity in the match.
Nadal was now in the ascendancy and broke in the opening game of the third set and, with the match approaching the three-hour mark, Verdasco began to show signs of fatigue, coming back from two break points down to hold in the seventh game. The 14-time Grand Slam champion's resilience ultimately paid off, however, breaking again in the ninth game with a dipping forehand return to take the set 6-3.
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It was to be one step forward, one step back for Nadal as he was forced to go the distance in the fourth. Verdasco gained the advantage in the first game but Nadal rallied at 3-5 down to earn his break back as another tie-break was called upon. Yet again Verdasco claimed the decider, seemingly finding a new lease of energy as an ominous ace levelled the match at 2-2.
Nadal had his nose in front immediately with a break in the opening game of the final set but that was to be his final stand as Verdasco capitalised on Nadal's short serve in the fourth game to win a break back.
From that point on there was only one winner as Verdasco claimed six in a row to earn his spot in the second round and claim revenge for his 2009 defeat in the semi-finals.
The world number 45 will go on to face Israel's Dudi Sela in the next stage.