The outcome in Toronto was 6-2 7-6 in Nadal's favour in a clash in front of a near-sellout crowd on a warm, sunny afternoon in Canada.
Despite his loss in two, it was still an incredible week for Tsitsipas, who moves up from 27th to 15th in the world.
The Greek, whose 20th birthday was on the day of the final, saw off four players who are inside the world top 10: Dominic Thiem, Novak Djokovic, Alexander Zverev and Kevin Anderson.
“First of all, I want to thank Stefanos for an amazing week and a happy birthday,” Nadal said after being presented with the trophy.
“I want to say well done and keep going - you have an amazing future ahead of you. You also have a great team behind you supporting so I wish you all the very best."
Tsitsipas aspires to attain Nadal's heights
Despite a sensational seven days in Toronto, Tsitsipas was not surprised by reigning French and US Open champion Nadal demonstrating his quality.
“He was normal like all of us and he managed to become this beast, this monster that he is today," He said.
“It is true - that is how you feel when you play against him. I need to work much more and, hopefully, I can reach his level one day.”
Following his latest success Nadal has opted to withdraw from this week's Cincinnati Masters, which is ahead of the US Open beginning on 27 August.