Second seed Roger Federer, who has lost the last three Monte Carlo Finals to the Spaniard, advanced to the third round with a straight-sets win over Italy's Andreas Seppi but Juan Martin del Potro, of Argentina, crashed out.
Nadal faces qualifier Nicolas Lapentti in the third round after the Ecuadorian won an astonishing three-and-a-half-hour match against former world No1 Marat Safin 7-6, 2-6, 7-6.
The Russian was 4-0 and 5-2 up in the deciding set but Lapentti kept battling, saving a match point in a dramatic ninth game that was halted for a number of minutes when a spectator collapsed. Federer, who married long-time girlfriend Mirka Vavrinec at the weekend, overcame a shaky start to beat Seppi 6-4, 6-4.
Federer had never dropped a set to the Italian in four previous meetings but was slow to find his rhythm in the 83-minute clash.
"I thought it was a pretty good start on clay," said Federer. "It's a matter of getting used to it and not making too many errors. It was frustrating at times but I had a good stretch at the end of the first set and the beginning of the second. I'm happy I'm through."
Federer now faces 13th seed and Swiss compatriot Stanislas Wawrinka, who was made to dig deep and work hard for his 2-6, 7-5, 6-2 over Argentina's Martin Vassallo Arguello.
Del Potro came into the tournament on a high after beating Nadal to reach the semi-finals in Miami and climb to fifth in the world rankings but he was brought crashing down to earth by wild card Ivan Ljubicic.
The 30-year-old Croatian registered a 4-6 6-1 6-4 victory. Twelfth seed David Nalbandian battled back from a set down to beat Spain's Marcel Granollers 4-6, 6-3, 6-1.