, 2-6, 6-2, 6-0, yesterday in Hamburg, Germany, to win his fourth Hamburg Masters title and end Nadal's record winning streak on clay at 81 matches.
Nadal, ranked No. 2 in the world behind Federer, had been unbeaten on the surface since April 2005, a run that included 13 titles.
"If I have to lose against anyone, then he is the man," Nadal said. "I am not sad to lose to the best in the world. Now I have to start another [streak]."
Federer's come-from-behind win was his first over Nadal on clay in six matches. Nadal leads the overall series, 7-4.
"It was an incredible performance from my side," Federer said. "I had a great day, it's nice to be playing well again. It's my first title on clay in a couple of years."
The win ended Federer's drought after he failed to win a title in his last four events, his worst run since he became world No. 1 in February 2004.
"Eighty-one matches is an amazing series," Federer said. "I have a lot of respect for him."
Federer was playing his first tournament since splitting with coach Tony Roche. The Swiss player has said he will go to the French Open and Wimbledon without a new coach.
Federer earned $458,218 for his win, and Nadal half of that.
In other tournaments:
* Jelena Jankovic defeated Svetlana Kuznetsova, 7-5, 6-1, to win the Italian Open in Rome and join Justine Henin as the only three-time winners on the women's tour this year.
* Pete Sampras relied on his still-powerful serve to defeat Todd Martin, 6-3, 1-6, 10-6, in the Athens Champions Cup final in Greece. Sampras' victory was his second in two Outback Champions Series events this month - his first competitive outings in nearly 5 years.
* Don Bailey was named Montana State's interim head coach. Head coach Mike Kramer was fired Friday following the latest in a string of arrests involving current and former players. Bailey was the offensive coordinator and quarterbacks coach.
* Former NFL lineman John Gonzaga, who was working in a steel mill when he was signed by the San Francisco 49ers in 1956, died Thursday at 74 at his home in West Bloomfield Township, Mich. Gonzaga also played for Dallas, Detroit and Denver in an 11-year career.
* Olympic swimming champion Michael Phelps lost for the first time in six individual finals at the Eric Namesnik Memorial Grand Prix, finishing second to Club Wolverine teammate Erik Vendt in the 1,500 freestyle in Ann Arbor, Mich. Vendt won in 15 minutes, 31.29 seconds, while Phelps clocked 15:34.18.
* Olympic champion Meseret Defar, of Ethiopia, broke the world record in the women's 2-mile run at the Adidas Track Classic in Carson, Calif. Defar won in 9 minutes, 10.47 seconds, lowering the 1999 mark of 9:11.97 by American Regina Jacobs.
* Luna Rossa, of Italy, eliminated BMW Oracle Racing in their America's Cup challengers series, clinching the best-of-nine semifinals, 5-1, in Valencia, Spain. For the first time in 24 years, there will be no American team in the Louis Vuitton Cup final. Luna Rossa will meet the winner of the other semifinal series between Emirates Team New Zealand and Desafio Espanol. The Kiwis lead, 4-2. The winner of the June 1-11 Louis Vuitton Cup final will advance to sail against defending champion Alinghi in the America's Cup from June 23 to July 4.
* Veteran striker Romario, 41, scored the 1,000th goal of his 23-year career during Vasco's game with Sport of Recife in the second round of the Brazilian national championship in Rio de Janeiro. Three other players reportedly have scored 1,000, the most notable being Pele, who had 1,281.
* American Steven Lopez defeated Korean Jang Chang-Ha in sudden death in Beijing to claim his fourth straight taekwondo welterweight world championship.
* Manny Pacquiao, the WBC International super featherweight champion, conceded defeat in his candidacy for a seat in the Philippines Congress. He was defeated by Darlene Custodio, who has said Filipinos weren't prepared to lose an icon like Pacquiao to the country's chaotic politics. Pacquiao urged Custodio and other winning candidates in his southern home province of South Cotabato to "make good on their promise to help the poor."