The Spaniard, who learned he was going to reclaim the ATP summit a week ago, last topped the men's charts in July 2014.
The 31-year-old Spaniard, who won his 15th Grand Slam title this year at Roland Garros, deposes Britain's Andy Murray, who withdrew from the tournaments in Montreal and Cincinnati with a hip injury.
Nadal, who has spent 141 weeks in the top spot, has struggled with knee injuries since first becoming No. 1 in August 2008 after a Cincinnati semi-final run. He has admitted doubting he could ever regain the number one spot after so many years.
Nadal, knocked out in the Cincinnati quarter-finals last week by Australian Nick Kyrgios, had slipped to as low as 13th in the ATP rankings midway through 2015.
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And his path back to the top one week before the closing Grand slam of the season at the US Open was hailed by Chris Kermode, ATP Executive Chairman and President.
"To regain the No. 1 ranking nine years after having first reached it is unprecedented," he said.
Kyrgios's progress to yesterday's Cincinnati final earned him a five-rung rise to 18th with the man who beat him, Bulgarian Grigor Dimitrov, breaking into the top 10 in 9th.
ATP rankings on August 21
1. Rafael Nadal (ESP) 7.645 (+1)
2. Andy Murray (GBR) 7.150 (-1)
3. Roger Federer (SUI) 7.145
4. Stan Wawrinka (SUI) 5.690
5. Novak Djokovic (SRB) 5.325
6. Alexander Zverev (GER) 4.470 (+1)
7. Marin Cilic (CRO) 4.155 (-1)
9. Grigor Dimitrov (BUL) 3.710 (+2)
10. Kei Nishikori (JPN) 3.195 (-1)
11. Milos Raonic (CAN) 2.870 (-1)
12. Jo-Wilfried Tsonga (FRA) 2.690
13. David Goffin (BEL) 2.525
14. John Isner (USA) 2.425 (+5)
15. Roberto Bautista (ESP) 2.425 (-1)
16. Pablo Carreno (ESP) 2.385 (+1)
17. Jack Sock (USA) 2.345 (-1)
18. Nick Kyrgios (AUS) 2.325 (+5)
19. Tomas Berdych (CZE) 2.310 (-4)
20. Lucas Pouille (FRA) 2.210 (-2).