"Your tenacity, dedication, fighting spirit is going to be taught for decades. Your legacy will live forever," 24-time Grand Slam title winner and fellow former world number one Djokovic wrote on Instagram.
Djokovic and Nadal clashed 60 times in their careers with the Serb edging their rivalry 31-29.
They met for the first time at the French Open in 2006 when Nadal triumphed while Djokovic won their last clash, also on the courts of Roland Garros, at the Paris Olympics this year.
"Rafa, one post is not enough to express the respect I have for you and what you have done for our sport. You have inspired millions of children to start playing tennis and I think that's probably the greatest achievement anyone can wish for," added Djokovic of Nadal, a 22-time major winner.
Nadal will play his last tournament at the Davis Cup finals in Malaga in November.
"Only you know what you had to endure to become an icon of tennis and sport in general. Thank you for pushing me to the very limit so many times in our rivalry that has impacted me the most as a player," added Djokovic.
"Your passion for representing Spain has always been remarkable. I wish you the best possible farewell in Malaga with the Davis Cup team of Spain. I will be there in person to pay respect to your stellar career."