It was sweet revenge for a straight sets loss to the Serb in last year's final and the win means that he will move back ahead of Roger Federer at number two in the world rankings.
"I'm happy that I won in Rome without losing a set," said Nadal. "I was facing some of the best players of the world this week.
"The most important thing is not to win against a particular player but to win the most important title of the year for me. This is why I am happy now."
The victory was also the perfect preparation for the defence of his French Open title with the tournament due to get underway in Paris on Sunday and takes his career head-to-head with his rival to 18-14 in his own favour.
It meant that Nadal won claycourt titles in Monte Carlo, Barcelona and Rome with his only loss coming in Madrid where he went down to compatriot Fernando Verdasco.
Nadal said that he was pleased to have been able to come back on a dry day to play the final, his last tournament preparation for the major.
"We were here until 8.15 last night and we played today because we love this tournament. Yesterday the conditions were not perfect. The ATP made the right situation.
"It was a sad situation but I stayed one more day in Rome instead of resting. I preferred that because I love this tournament."
Djokovic said he was out-played by the Spaniard.
"He is always the favourite, even if I've won agaisnt him seven times (2011 finals)," said Djokovic. "He is the best player in the world on this surface."
Djokovic failed to win a claycourt title as he prepares to go into Roland Garros where he is aiming to make it four Grand Slam titles in a row after winning Wimbledon and the US Open crowns last year and the Australian Open early this year.
Nadal stands 16-1 on clay this season after winning the 49th title of his career. He is 35-4 in finals on clay and moved back into the lead in career Masters 1000 trophies on 21, with Federer on 20 after his Madrid title of eight days ago.
The victory prevented Djokovic from a Foro Italico hat-trick winning the event in 2008 and 2011.
"If you don't use the opportunities against Rafa he gets the momentum on his side and plays better," said Djokovic, who said he is pleased with his week despite the concluding defeat.
"I made a lot of unforced errors today. In my opinion, he didn't have to play his best, I made a lot of errors and that cannot happen when you play Nadal.
"What can you do - Nadal is across the net and you need a strong and precise shot. It's been a good week and he deserved to win."
In a final held over from Sunday because of rain, Nadal immediately pounded out two break points on the opening Djokovic serve, but the Serb saved both with powerful backhands.
There were two more break points for the Spaniard in the fifth game as Djokovic made a mess of an overhead smash and Nadal converted the second of these, easily running down a poorly-executed Djokovic drop-shot.
But just as Nadal seemed to be taking command, Djokovic earned his first break point of the match in the following game which he took as an out-of-position Nadal flopped a forehand into the net.
And two games later he had Nadal back-pedalling again with a series of punishing drives from the baseline only for a bad line-call to rob him of a first set point.
Nadal levelled at 5-5 and then, on the back of some stupendous defending, he grabbed a second break of serve and made good on it by outgunning Djokovic in a thrilling exchange of shots at the net.
Still riled by the line-call, Djokovic smashed his racquet at the exchange of ends and was warned by the umpire before Nadal comfortably served out to pocket the first set in 76 minutes.
"A lot of changed from 5-all," said Djokovic, who made no apologies for his second racquet smash in three matches. "I made incredible mistakes."
Nadal took up in the second set where he had left off in the first and he had the Serb scrambling from side to side in a failed attempt to prevent the five-times champion from grabbing an early break.
Djokovic had an immediate chance to get back on level terms in the set but he failed to capitilise on four break points in the next game allowing Nadal to move 2-0 ahead.
The defending champion stopped the rot by holding serve to make it 2-1 and he had two break-back opportunities in the next game only to squander both with unforced errors.
He was made to pay the price for those missed opportunities as Nadal slammed shut the door on his following serves and then broke again to become the first player to win six Rome titles.