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The Serbian world No. 1 eased into his ninth final at Melbourne Park with a 6-3, 6-4, 6-2 win under the lights at Rod Laver Arena and will battle either Stefanos Tsitsipas or Daniil Medvedev for the title.
Nadal's bid for a record 21st Grand Slam title ended with a quarterfinal defeat to the Greek.
World No. 1s Ash Barty and eight-time champion Novak Djokovic will lead the fields at the Grand Slam slated to be held from February 8-21.
Fittingly the London era ended as it began with a Russian winner after Nikolay Davydenko took the 2009 title.
Rafael Nadal's dream of a first ATP Finals title and Novak Djokovic's quest for a record-equalling sixth vanished in defeats by Daniil Medvedev and Dominic Thiem in two seismic semifinals.
The 27-year-old Austrian appeared to be sliding to defeat when he trailed 0-4 in the third-set tie-break but stormed back to claim a 7-5, 6-7(10), 7-6(5) victory in just under three hours.
The Spaniard beat defending champion Stefanos Tsitsipas 6-4, 4-6, 6-2 in the last round-robin match in the London Group.
The world No. 3 struck 37 clean winners to claim his second round-robin victory and reigning champion Stefanos Tsitsipas's narrow defeat of Andrey Rublev later guaranteed the Austrian a semifinal spot with a match to spare.
Austrian Dominic Thiem got his campaign off to a fine start with a 7-6(5), 4-6, 6-3 victory over Stefanos Tsitsipas.
Rublev, 23, had previously won tournaments in Doha, Adelaide, Hamburg and St Petersburg and improved to a Tour-leading 39 wins in 2020 -- tied with world No. 1 Djokovic.