The top eight available players in the men's rankings – with Roger Federer absent – will compete at the end-of-season tournament, which starts on Sunday behind closed doors amid a coronavirus lockdown in England, AFP reported.
The two round-robin groups have been named Tokyo 1970 and London 2020 on the 50th anniversary of the first staging of the event.
World number one Djokovic is in Group Tokyo alongside Daniil Medvedev, 2018 winner Alexander Zverev and Argentine debutant Diego Schwartzman.
Second-seed Nadal will compete against defending champion Stefanos Tsitsipas, Dominic Thiem, and Andrey Rublev, who is appearing for the first time, in Group London.
Five-time champion Djokovic, who recently equaled Pete Sampras's record of six yearend number one finishes, has lost just three matches this season, with one of those his default at the US Open.
The Serbian, who has not won the London event since 2015, said he was looking to end his season on a high at the elite eight-man event.
"Coming into the tournament and knowing that I have clinched the yearend number one releases some of the pressure, definitely," he said.
"But at the same time it doesn't change what I hope to achieve in this tournament and why I'm here.
"I really want to win every single match that I get to play and try to get my hands on the trophy and I want this trophy as much as anybody."
Nadal, who pulverized Djokovic in the French Open final last month to pull level with Federer on 20 Grand Slams, has qualified for the ATP Finals for a record 16 consecutive years.
The Spanish world number two is well aware of his shortcomings on indoor hard courts – only one of his 86 trophies has come on the surface.
"I think I am able to play a little bit better the last couple of years indoors than what I did at the beginning of my career without a doubt but that's the numbers and I can't say something different," said the 34-year-old two-time finalist.
"I hope to change that this week."
Despite his lack of indoor success, the shortened season could count in Nadal's favor – he has been forced to withdraw from the ATP Finals six times previously.
Last year's winner Tsitsipas, who beat Thiem in the final, comes into the tournament after early exits in Vienna and Paris.
"Very happy to be back, that's for sure," said the Greek world number six. "Every year I get to experience being back here is thrilling.
"It's like a meeting spot for those that had a good year to be back here, celebrate their hard work, their dedication to the sport. I'm very privileged to be part of it."