Eighth seed Thiem can take great heart from his performance, which was a vast improvement from his Barcelona Open defeat to Nadal, with the Austrian keeping the 14-times Grand Slam victor concerned throughout with some brutal baseline hitting.
The Spaniard was as relentless as ever on Sunday, answering everything Dominic Thiem tossed at him during the Mutua Madrid Open final to overcome the Austrian 7-6 (8), 6-4 in La Caja Mágica.
A little less than two weeks ago, Nadal had beaten the 23-year-old Austrian in the finals of the Barcelona Open.
Nadal is now tied with Novak Djokovic for the most Masters titles and will have the chance to set a new record next week.
I suggested in my opening Masters 1000 preview of the season - Indian Wells - that a power shift was looking possible in tennis in 2017. Thiem again responded with a fierce battle with Nadal serving for the match but the Spaniard finally put him away with a forehead victor to end the 2-hour, 18-minute match.
The 14-times grand-slam victor broke in the opening game of the second set and saved a break point in the next, maintaining a two-game advantage until a thrilling 10th game. Bet: the victory of Rafael Nadal with a -4 for the game. "For Novak, they were really good years".
He did salvage some pride by seeing off more pressure on his serve to at least hold twice and force Nadal to serve out to take the first set in 40 minutes. Thiem saved five match points to get past Grigor Dimitrov in R16 match last week and some of that fighting spirit will come in handy when he steps on the court in an attempt to win his maiden Masters 1000 final today. "I knew that I had to play well. I'm very happy at the moment", said Thiem. Djokovic fought back but Nadal stayed just ahead until the 10th game when the Spaniard lost two match points.
The "king of clay" is unbeaten on his favourite surface this year, and took his record to 15-0, as he added to the titles he has recently collected in Monte Carlo and Barcelona.
Nadal has a tour-leading 34 victories in what has been a superb season following some lean years for the 14-time Grand Slam champion.
"Now that I did it once, playing really well in such a big tournament, the next step is to maintain this level next week".
He told atpworldtour.com: "What's important to me is to make it to another final". This was his first semifinal since he won that title in January.
"It gives me the possibility to play another final and to continue in a positive line".
Kristina Mladenovic inflicted Maria Sharapova's first defeat since returning from a doping ban in the semi-finals of the Porsche Tennis Grand Prix.
Nadal was hitting forehand winners from all over the court and he comfortably saw out the first set before breaking again at the start of the second.