The Swede, who came into the event as an alternate after Andy Roddick was forced to pull out through injury, powered the world number two off court, winning 6-4, 6-4 in just an hour and 40 minutes.
Last time the pair met, Soderling made history by being the first player to defeat Nadal in 32 matches at Roland Garros and he looked intent on causing another upset from the start. Nadal has not failed to make the semi-finals in two previous appearances at the year-end event but qualification will now be tough.
Soderling started aggressively, keeping the Spaniard on the back foot with consistent depth and pace and firing inside out forehand winners, just as he did in his four-set victory on the French clay.
He broke first for a 3-0 lead before Nadal struck back at 3-1 and held serve to level the match once again. Soderling still looked the stronger of the two, however, holding to love at 5-4 before converting his first set point thanks to a wayward forehand from the Spaniard.
Nadal was the first to strike in the second set, breaking in the third game with a little help from a Soderling double fault. But the Swede returned the favour immediately, hawkeye judging that the SpaniardÃ¢â‚¬â„¢s forehand drifted long on break point.
The world number two mounted another challenge on the SwedeÃ¢â‚¬â„¢s serve at 2-2 and 4-4 but each time in vain, as Soderling stuck to his game plan and continued to deliver hammer blows off both wings.
At 5-4 the Spaniard bravely saved one match point following a tentative exchange, but the French Open runner up created another chance for himself with a cross court backhand winner. In a repeat of the first set, NadalÃ¢â‚¬â„¢s forehand error handed Soderling his first ever win in the ATPÃ¢â‚¬â„¢s season-ending showpiece.
Ã¢â‚¬Å“I was very nervous at the start but I got off to a great start,Ã¢â‚¬Â said the 25-year-old Swede in an on-court interview with Sky SportÃ¢â‚¬â„¢s Mark Petchey. Ã¢â‚¬Å“I really served well when I needed to. I think overall I played a really good match so IÃ¢â‚¬â„¢m very happy.Ã¢â‚¬Â
Soderling seems quietly confident of progressing in the tournament, which is being held in LondonÃ¢â‚¬â„¢s O2 arena for the first time following a four-year stint in Shanghai.
Ã¢â‚¬Å“It is a long way to go but as I said IÃ¢â‚¬â„¢ve got off to a great start beating the world number two. I will just take it match by match.Ã¢â‚¬Â
The Swede is in the form of his life this season, having recorded a career high ranking of number nine and his first grand slam final.
Ã¢â‚¬Å“I have had some trouble in the past with injuries,Ã¢â‚¬Â he said. Ã¢â‚¬Å“I think I have played much more consistently this year than others. This is by far the best year of my career.Ã¢â‚¬Â
Soderling was also pleased with the support he received from the 17,000-plus spectators in the arena.
Ã¢â‚¬Å“This is by far the best tournament I have ever played in,Ã¢â‚¬Â he insisted.
It was an afternoon of upsets as number seven-ranked doubles team Max Mirnyi and Andy Ram beat the world number two pairing of Bob and Mike Bryan in straight sets, 6-4, 6-4.
MORE: The latest football news
MORE: The latest tennis news
BIOGRAPHY: Jerome Boateng
BIOGRAPHY: Danny Rose