There have been 26 men who have occupied the number one spot since the rankings were computerised in August 1973 but only 14 have been king of the circuit on 31 December.
The 31-year-old Spaniard assured himself of the accolade after beating Hyeon Chung in the last 32 at the Paris Masters on 1 November.
Two days later on the morning of his quarter-final against Filip Krajinovic, he withdrew from the tournament citing problems with knees.
"It has been a fantastic season, a very emotional one after all of the things I have been going through in the last couple of years with injury," said Nadal.
"To have this trophy again is something I never thought was possible. It would not have been possible without my family and my team.
“I want to say many thanks to them as they have been there for me in many of the tough times. And of course I want to say thank you to all the fans around the world. They have been a huge support during the whole year in every event. Without all of you, it wouldn’t be the same.”
Nadal, who says his knees are still causing him concern, is the oldest man to boast the top spot at the end of the year and his bid to lift the end of season championships for the first time starts on Monday against the seventh seed David Goffin.
Chris Kermode, the chief executive of the ATP, which organises the men’s tour, handed the prize to the Spaniard in front of a packed 02 Arena in London which had just savoured Roger Federer’s opening match win over Jack Sock at the ATP Tour Finals.
Nadal has won six tournaments in 2017 including a 10th French Open title. He also won the US Open for the third time. There was also a 10th crown at the Monte Carlo Masters as well as 10th trophy at the Barcelona Open. He also claimed the Madrid Masters for the fifth time.
World number two Federer, who is seeking his eighth title of the year, said Nadal deserved the kudos of ending the year as world number one.
“I don’t feel any regrets,” said the 36-year-old Swiss. “At my stage and at my age, being world number one comes to me or it doesn’t. Rafa had more gas left in the tank than I did. I couldn’t play as much as I would have liked and perhaps I’ve even played too much.”
Federer added: “Sure, I would have liked to be the year end world number one but you can’t be it if you don’t play that many tournaments so I have no problems.”